What is a bill of sale for a car?

A bill of sale for selling a car serves as proof of purchase and transfer of ownership. It's a combination of a sales receipt and a contract. Both parties sign it to demonstrate the sale's agreement and the terms of the deal. Not all states require a bill of sale, but they're useful for the buyer and seller to have on file.

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How to get a bill of sale for a car

For states where you need a bill of sale for a motor vehicle as proof of purchase, you may have to use the official state Department of Motor Vehicles (DMV) vehicle bill of sale form if they offer one. Some states let you draft a bill of sale yourself, and others give you the option of using an official form.

Do I need a bill of sale when buying a used car?

A bill of sale is not required in every state. However, a bill of sale when buying a used car is beneficial for several reasons. It serves as proof of the transaction for both sellers and buyers if someone tries to deny it. A bill of sale also serves as a release of liability for the seller. If the buyer gets into an accident with the car, the seller can use the bill of sale to prove they no longer own the car. The bill of sale proves that the seller is not legally responsible for any damage or injury the buyer might cause. It also protects the seller's auto insurance company from any accident claims.

For the buyer, a bill of sale helps establish proof of ownership and defines the car's condition at the time of purchase. If there's something wrong with the car that the seller did not disclose at the time of purchase, the buyer can use the bill of sale as evidence in any legal action they may take.

What should appear on a bill of sale for selling a car?

If you're going to create a bill of sale form, check with your DMV to see what they require on the form. If you are buying or selling the vehicle in installments, some states may also require a promissory note and the bill of sale. Here's a list of the most common items that may appear on the bill of sale form:

  • Date of the sale
  • Purchase price
  • Payment details (paid in full; or paid in installments)
  • Odometer reading at the time of sale
  • Model year, color of the car and car make and model
  • Year of manufacture
  • Vehicle identification number (VIN)
  • Type of body
  • Number of engine cylinders
  • A detailed description of the vehicle
  • Warranties (is the car being sold "as is" or with any other terms and conditions)
  • Names, signatures, and legal addresses of buyer and seller

What is a notarized bill of sale?

While some states allow the buyer and seller to complete a bill of sale by themselves, other states require a notarized bill of sale. When a you need a notarized bill of sale, the buyer and seller must meet with a notary public. A notary is a person the state has authorized to serve as an impartial witness to signing important documents. States generally regulate how much a notary public may charge for this service, often $10 or less. However, your local bank may offer notary services for free to its customers. Your local library may have a notary public on staff who can provide the service for free to cardholders in good standing.

In the case of a bill of sale for selling a car, the notary public will likely verify the buyer's and seller's identities through a driver's license. They will also make sure the buyer and seller are both aware of all the terms in the bill of sale and are willing parties of the sale. Then the notary public will stamp the bill of sale with a notary seal and sign the bill of sale as proof of notarization.

What are other car ownership documents besides a bill of sale?

States handle the transfer of car ownership in different ways. Some states require a bill of sale as proof of the transfer of ownership. Most other states have a means of ownership transfer tied to either the car title, the car registration, or both. For example, some states have a car title transfer form that appears directly on the title itself. First, the seller signs the title to the buyer. Next, the buyer takes that document to apply for a new title and update the registration in their name.

In these cases, you don't need a bill of sale for a car. But regardless of whether you're selling a car privately or buying a car from a private seller, it's generally a good idea to have one.

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