Vehicle bill of sale: How-to guide 

A brief introduction to a vehicle bill of sale

You’ve listed your car and found your buyer—it’s time to finish your deal. In the modern marketplace, your transaction can’t be completed with a simple handshake and a wave goodbye. Your vehicle transfer also requires you to file with your state’s motor vehicle department and other local agencies. This process calls for a complete, well-drafted vehicle bill of sale. A bill of sale outlines the terms of your arrangement and prepares for your car’s new title and registration.

A bill of sale is like a receipt. It proves that ownership of a particular piece of property has changed hands. It also details the terms of the sale, including information about price, delivery, and condition. Bills of sale can help to prove the identity of a vehicle’s true legal owner. Moreover, many states and counties use these documents to determine the amount of sales tax owed on the transaction, if any. 

Buyer and seller responsibilities 

Ensure the contact information is correct

Getting the correct name and physical address of the parties involved in your deal is essential. This helps in contacting the person or company in case an emergency situation arises regarding the ownership of the vehicle.

Handover bill of sale only after receiving the sum

If you are selling the vehicle, give the buyer a completed bill of sale only after you have received your money and the transaction is complete. Since the bill of sale states that you have already been paid, it may be difficult to collect any outstanding amounts if the buyer has written evidence that its payment obligations are complete.

Execute a promissory note, if required

A signed bill of sale means that the payment of a vehicle is complete on the sale date. If the buyer intends to make a down payment at the time of purchase and pay the remainder over time, the parties should execute a promissory note and use a bill of sale that contemplates such deferred payment.

Make copies to sign

Sign two copies of the bill of sale, one for you and one for the other party.

Involve the third party (optional)

Although not strictly required, consider bringing a third party with you when the bill of sale is signed. If questions arise about the sale, that person can serve as a reporter of the transaction. Alternatively, you and the other party can notarize your signatures on the document.

Record the bill

Once your bill of sale is complete and signed, visit your local county clerk or tax office to record the bill. They will use the bill of sale to estimate your sales tax and record the transaction.

Confirm the sale with the state DMV

The seller should contact its state Department of Motor Vehicles (DMV) immediately after completion of the sale and let them know the vehicle has been sold and to whom. This will protect the seller if a ticket is issued or an accident occurs in the period between the sale and the re-titling of the vehicle.

To complete the transfer of title, both the seller and the buyer should send a copy of the bill of sale to their state’s DMV. Some states require that the seller report the title transfer within five (5) days of the sale and the buyer report the title transfer within ten (10).

Complete any extra requirements

Additional steps may be required for your vehicle transfer. Check with your local motor vehicle agency and tax authority to see what documents may be needed.

Take out the old license plate

Remove the vehicle’s license plate before physically transferring it to the buyer. In many states, this is required by law.

Key components of a vehicle bill of sale

The following instructions will help you understand the terms of your bill of sale.

Location of sale

Write in the name of the state and county where the sale will take place. If the parties are from different counties, use the state and county where the vehicle is located.

Purchase price

Be sure to include the full price paid, including any previous down payments that were made to secure the vehicle.

Names and addresses of parties

Provide the details of the involved parties. In a bill of sale, the party that will sell the vehicle is called the “seller,” and the one who buys it is called the “buyer.” Note that only the individual whose name is on the title of a vehicle is permitted to sell it. This means that if a married couple is selling a car but that car is titled in the wife’s name, only the wife should sign the bill of sale.

Vehicle location and description

Here the information about the vehicle is included. Be as specific as possible, making sure that the automobile being sold can be identified clearly from the description. You must include the location, make, model, body type, year, and Vehicle Identification Number (VIN). For example:

• Location: Include the county and state where the vehicle is currently situated.
• Make: Name of the vehicle company like Ford, Chevrolet, Lincoln, BMW, etc.
• Model: Corvette, M5, Mustang, etc.
• Body type: Sedan, Coupe, Convertible, SUV, etc.
• VIN: It is a vehicle’s 17-character unique identifier. Generally, it is located in one of the following places: the dashboard; the steering column; the vehicle’s firewall; the driver-side door; or the passenger-side post. If you can’t locate this number in these spots, you can find it in the user manual.

Seller’s representations and warranties

It is the seller’s promise that he/she owns the vehicle and no other party holds an interest in the vehicle.

Buyer’s representations and warranties

The buyer’s promise that the person signing the document has the authority to do so.

No other warranties

It states that the vehicle is being offered “as is.” The buyer should note this provision if the vehicle shows problems in the future; the seller is specifically disclaiming responsibility in this part.

Inspection

A summary of recent mechanical inspections done on the motor vehicle should be mentioned here. If the seller knows of any defects in the vehicle, those problems must also be disclosed here. Any known defects that are not reported could invalidate the sale and may bring later charges of fraud.

Delivery of vehicle

Mention where and when the vehicle should be picked up by the purchaser.

Conveyance of title

Indicates that title to the vehicle will be given to the buyer on the day it receives that vehicle. This section also includes the seller’s promise that it will sign every document needed to effectuate the title transfer.

Cancellation of insurance and tags

The seller’s agreement is to cancel any remaining insurance or tags that were maintained on the vehicle.

Additional terms of sale

If there are additional terms you’d like to add to your agreement, enter those here. For example, the parties may wish to include a requirement that the car be cleaned thoroughly before the delivery date.

Signatures

Each party must sign and print their name. Several states require that each party provide a phone number as well. Although this may not be a requirement in your state, it’s a good idea for both parties to provide as much information as possible. Be sure to date this document, as a number of important deadlines start to run on the sale date. If a third party witnessed the signing, have that person also sign the document. 

Odometer disclosure statement 

Federal and state laws require an accurate report of a vehicle’s mileage on its bill of sale. Some states require this disclosure statement to be on a page separate from the bill of sale itself. It should include details like the seller’s name and the number of miles on the vehicle.

Frequently asked questions

What's a vehicle bill of sale?

A bill of sale is a receipt transferring ownership from seller to buyer. A bill of sale for a vehicle legally transfers the vehicle ownership from seller to buyer and clarifies details like price and payment.

What information is required to complete a bill of sale?

To fill out the bill of sale form you’ll need the name and contact details of the buyer and seller. Also, the vehicle’s make, model, body type, year of purchase, and registration number.