What happened? You’ve been driving that nice little used car you bought a couple of years ago, and now you’ve “gone and done it”. Meaning; you went to your “ever so friendly” car dealer the other day and found the brand new 2011 AxleTwister Super 88 of your dreams, and the salesman there made you a deal you just couldn’t resist.
But you just couldn’t part with your car on the terms the dealer offered you, so now you have found a buyer that finds your little “2004 Spitfire 4-door SEL” to be the car of his dreams. He says he has the cash to buy it, which helps a lot. He doesn’t have to go get financing from his favorite bank or credit union to buy his car.
Now “what do you do?” In today’s computerized world, it is usually fairly simple and straightforward, but there are some helpful things you need to be aware of. Also, that is one of the benefits of your state’s car registration office. They will see to it that the transfer occurs correctly and legally.
Two normal scenarios appear when selling a car. Either it is a completely paid-off vehicle, or it is one that still has a loan balance.
A completely paid-off vehicle is the easier one of the two. If it is paid off, then you should have a clear title. Retrieve your title, and make a photocopy of it just for your personal records. Whether your car is clear and paid off, or you still owe a balance, you would also want to have (create yourself) a “Bill of Sale”.
You can go to your state’s car registration website, and they usually have a form you can print and fill out. Florida’s Bill of Sale is called a “Notice of Sale”.
The information you will need for the Bill of Sale form is also the same as what is on the title. This is a good time to verify the vehicle id number by looking at it through your car’s windshield. You will need the mileage too. Here is what a typical Bill of Sale form contains:
- The year, make, model, body style, and color of the vehicle
- The Certificate of Title number
- The Vehicle Identification Number
- Buyer’s name and address
- Date of sale
- Selling price
- Odometer disclosure statement
- Sellers name and address
- Buyer and Seller’s signatures
- In some states, it is necessary to have a notary for a Bill of Sale.
The original form goes to the seller, and a copy goes to the buyer. Now, why do you need this form? More specifically, why does the Seller need the form? The buyer already has the signed-over title and the vehicle, and you have the cash. You did get cash, right? Or, you received a cashier’s check or some form of verifiable funds.
Ideally, you and the buyer should go to your state’s vehicle registration office and have the transfer made together. Many times this does not happen for various reasons. So, the seller, without a Bill of Sale, would have no proof that he ever sold a car to the buyer. It is important to be able to prove that the seller actually sold his car for personal and insurance liability reasons.
Once the buyer takes possession of your vehicle, you do not want to be legally responsible for it any longer. It is also important that money is transferred prior to signing a Bill of Sale and transferring the keys to the buyer.
Even if the buyer does not go immediately to get the title transferred into his name, the seller should go as soon as possible (that day) to have the vehicle taken out of his name on the state database. This legally indicates the vehicle was sold but as yet has not been registered by the new owner.
Another wrinkle that many, if not most, are unaware of in Florida (check your state’s regulations), the license tag is paid for and goes with the owner of the vehicle. That means, when you sell the car (Florida, remember), you should take the tag off the car because it is your tag that you will need to put on your next car or turn in at the tag office when you take your bill of sale to them to show you no longer own the car. They will give you credit on their system to show you turned in your tag, so when you get your next tag, it will cost less than if you never owned a tag.
The buyer either has his own tag to put on the car he purchased from you or will need to purchase one when he registers the car he bought from you. If you let your tag go with the old car, you will have to purchase another one when you buy your next car, so save yourself a few bucks and keep your own tag. These are just some tips to help you out, as always, the devil is in the details.
Another reason you want the old car out of your name is that the buyer may have an auto accident before he gets down to the registration office. Hope not, but believe me, it happens more often than you might imagine. So, if the state knows (by your notifying them with your bill of sale and old tag), then legally, you have done your due diligence, and now, you can safely call your insurance company to let them know you no longer own the car.
If you are buying a new vehicle quite soon, you can make just one phone call to your insurance company to tell them you have sold the old one and purchased the new one. Most auto insurance policies and state laws give you a set amount of days to notify them of a change of vehicles, but it is best to let them know as soon as possible.
A change in vehicles often means a change in policies, so it’s a good time to compare insurance companies.
The other scenario is where you still have a loan balance, and your finance company, bank, or credit union has the title to your car as collateral. In order to sell your car and give the buyer a legal title, you must pay off the balance on your loan.
You will need to call your lender to find out what they need in order for you to expedite your sale. If you are with a local bank, credit union, or finance company, you can go to their local branch office to have the buyer pay off the car and give you any leftover balance due from the price of the sale.
Even if the lender can’t give you an immediate “signed over the title”, assuming you or your buyer pays off the car, then they will give you a release letter which you and the buyer can take to the registration office with the seller’s copy of the title and they will then transfer the vehicle for you. You and the buyer may want to go first to your state’s registration office to find out what they need to make the transfer. In all cases, check with your lender and your state’s vehicle registration office or website for what they will need in order for you to get your car sold and the buyer satisfied with what he needs as well.
When you go to your dealer to buy that new car, make sure you take your insurance card with you so the dealer can verify before he allows the car to leave his lot. If you need insurance when you are buying a car, then that can be purchased online or over the phone with CarInsurance.com. If you or your dealer needs assistance, just call our toll-free number, and a professional will assist you.
Now you know how to sell a car to another individual or simply how to sell a car.
— Michelle Megna contributed to this story.
Ask the Insurance Expert
Laura Longero
Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
Ask the Insurance Expert
John McCormick
Editorial Director
John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.
Ask the Insurance Expert
Leslie Kasperowicz
Executive Editor
Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.
Ask the Insurance Expert
Nupur Gambhir
Managing Editor
Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.