Buying or selling a vehicle is a big step and requires proper documentation for the transaction to be completed legally. While there aren't that many papers involved in a DMV transaction, the accurate completion of each is vital for the protection of both buyer and seller. Some states vary on required documents, but two are nearly universally necessary, the title and the bill of sale.
A car title establishes legal ownership of a vehicle. Without a clear title, no transfer of ownership can take place. To perform a title transfer, the following amendments must be made to the document:
- Signature of both buyer and seller
- Notation of the current odometer reading
- Date of transaction
Depending on your state, these changes to the title may need to be made in the presence of a notary.
If you are the buyer in the transaction, there are two things to check carefully for on the title. It is important to note if the title is a salvage title. A salvage title is issued when a car has been damaged to the point of total. While the car may have been repaired in the interim, it may still be a vehicle that will have nothing but a string of headaches.
The second red flag on a title would be the presence of a lien. A lien is placed by a lender and indicates that the seller does not have full ownership or, likely, freedom to sell it. It would be an unusual case for a seller to have possession of a title that carries a lien, but if they should, you may be putting yourself in position to pay off existing debt on the car should you purchase it.
Bill of Sale
A bill of sale documents the transaction. It contains information about the buyer and seller as well as the sales price. The reported sales price will be used to calculate the sales taxes that will be collected.
This form, available at the DMV, usually includes the following information to be completed.
- The make and model of the vehicle
- VIN number of the vehicle
- Selling price of the vehicle
- Date of the transaction
- Name, address and signature of both buyer and seller
Consider A Vehicle History Report
A vehicle history report is almost never required in a car transaction, but it's a good idea to include one whenever possible. The report contains a full record of the car's maintenance, service dates, accident history, number of owners and any changes in title status. Consider paying the little bit of money for the report. You'll have a better idea of whether to complete the purchase or not.
Car deals can be stressful, and that stress should come to an end after the deal is done. By taking care of paperwork details you can relax and, depending on which party you are in the transaction, enjoy your money or enjoy your new ride.