It is common knowledge that when you buy or sell something, a document needs to confirm that transaction. This document reveals the nature of the sale, including the buyer and seller’s names, the product’s price, and other relevant information. Such documents are typically referred to as a bill of sale. Alternatively, a bill of sale can also be called a sales receipt or proof of car purchase.
Likewise, when buying or selling a car, a car bill of sale is an important document to have. It is a legal document highlighting the terms and agreement of a car sale and providing sufficient evidence that a car was sold.
This article will explore all you need to know about a bill of sale for cars document and how to get a template.
What is a Car Bill of Sale?
A car bill of sale is a legal document representing the transaction and transfer of the said car between a seller and buyer. The document is critical as it highlights the terms of the agreement between the persons involved in the car purchase.
The car bill of sale is proof that the vehicle was sold from one party to another. In addition, you will find details such as the amount of purchase, terms and conditions of sale, buyer and seller information, date of transfer, and other relevant information in the document’s contents. The car bill of sale is typically signed after the buyer has paid in full and the seller has tendered the certificate of title to the buyer.
Car bill of sale can also be referred to as:
- Automobile bill of sale
- Auto bill of sale
- Vehicle sale receipt
- DMV bill of sale
- Car purchase agreement
- Proof of purchase
- Auto purchase agreement
Note: It is essential to point out that a car bill of sale involves the seller and the buyer. The seller is the company or individual selling the car, while the buyer is the individual or company making payments for the said car.
Importance of Car Bill of Sale
The car bill of sale is an important document that proves that a car was sold from one party to another in exchange for the money. It is a binding document that is necessary in the sale and purchase of a vehicle. Some of its relevance include:
If the car bill of sale is neither present nor signed into agreement during a car purchase, it is often deemed invalid. This means that disputes may occur over the vehicle’s ownership or condition in the nearest future. For instance, the seller might sue for theft after selling, and the law might support their claims without proper documentation. The buyer can also be liable to pay for fines or damages to the car after payment has been completed if there’s no bill of sale present. The document clearly states the present condition of the vehicle and its new owner.
Establishes new owner
The bill of sale document explicitly states the new legal owner of the car. Thus, the seller will not be held liable for damages, insurance, or fines incurred after the purchase has been completed with a car bill of sale document.
Reveals the nature of the payment
The bill of sale document also describes the nature of payment offered to the seller to purchase the car. For instance, the document could state whether the payment was total or partial. If the payments made are partial, the sale car bill will reveal the amount to be completed and the agreed due date for payment.
For registration purposes
In some states across America, a buyer may not be allowed to register their car with the DMV without a bill of sale document. Thus, the document isn’t only for the buyer and seller but also for registration and documentation purposes.
Proof for tax and insurance
The car bill of purchase template is also necessary for tax and insurance claims.
Some states may not require you to have an auto bill of sale. However, it is vital to have one in place.
When to Use it?
The car bill of sale is a legal document signed into an agreement between the seller and buyer after completing payments. The car bill of sale certifies that the car has been bought in its current condition.
It doesn’t matter if the car already has some issues. If the car bill of purchase has been signed, it’s no longer a problem for the seller. Thus, if the vehicle has future issues, the seller will not pay for repairs, damages, or fines.
Essential Information to be Included
A car bill of sale should include the following:
Vehicular information: Details such as the brand, model, color, year, and making should be included.
Odometer readings: The odometers reveal the number of mileage that the car has run. The odometer readings should be recorded at the point of sale.
Buyer information: The document should also contain the full name, contact address, phone number, or other vital details.
Seller information: The document should also record the seller’s correct name, phone number, and contact address.
Payment details: The price of the car should be stated as well as the nature of the payment. If the payment was completed in lump sum or in installments, it should also be noted. The form of payment (cash or electronic transfer) should be included.
VIN: The vehicle information number (VIN) is unique to every car. Thus, it should be included.
Sale date: The accurate date of the car purchase should be added as well.
Vehicle condition: The car’s current condition at the point of purchase is essential information that should be included in the document.
Terms and conditions: Technical phrases such as ‘the vehicle is being sold as is’ should be clearly stated in the document to prevent future disputes.
Signature: Both seller and buyer should sign the document, making it legal and valid.
Tip: In some cases, other information such as names and signatures of witnesses, liens or encumbrances against the vehicle, and the location where the car was last registered may be included.
It is essential that when filling the document, you do not use nicknames as it somewhat voids the document. Instead, ensure that the actual legal names of the buyer and seller are used throughout the document.
Car Bill of Sale Templates
From what we have explored so far, the car bill of sale is essential in selling or purchasing any car. Thankfully, we have provided a free downloadable car bill of sale template for your use. This car bill of sale template features all the sections that need filling by both seller and buyer.
How Does a Car Bill of Sale Work?
Before filling out a car bill of sale template, both buyer and seller must agree. Typically, the following steps should be done:
Negotiate the terms of sale
For the car sale to be valid, both parties need to be on the same page on the car price, payment method, and other conditions such as warranty. The car is sold in its present condition (or ‘as-is’). If there is no warranty included in terms of the agreement, this means that the buyer takes full responsibility for the car’s current conditions.
Fill out the form
Both buyer and seller need to fill out their names and contact details on the car bill of sale form. In addition, details such as price, warranty information, model, making, brand, year, vehicle condition, payment type, and the mileage must be included. The mileage can also be filled in a separate document, according to some states.
Finally, the vehicle identification number (VIN) should also be added to the document. It’s an actual 17-character code used to confirm the vehicle’s registration status and if it has been in an accident or stolen by someone else. This code is typically located inside the driver’s side door or windshield.
Here are a few forms:
Gather related documents
Other documents, such as the certificate of title, is presented to the buyer before the sale is made. If the seller doesn’t have the certificate of title, the buyer can head over to the DMV to process a new one. It typically costs around $20 and takes about 10 – 14 business days for the DMV to process.
Complete the sale
After the previous steps have been completed, both parties should sign the car bill of sale and keep copies of each for record purposes. After which, the seller relinquishes possession of the car, including the pink slip, to the buyer for payment. The car bill of sale doesn’t need to be notarized. However, in states like Nebraska, Montana, Maryland, West Virginia, and Louisiana, you’d need to contact a notary to authenticate the document.
Register the car at the DMV
The buyer would need to register the vehicle within 10 days at the DMV. In addition, they must submit a copy of the car bill of sale, proof of insurance, a valid ID, and certificate of title, plus additional fees for the car registration process.
Note: You should also note that while the car bill of sale is a legal document, it doesn’t automatically confirm the new ownership. Thus, it is required that both parties visit the DMV together to handle the paperwork and transfer the title.
In most cases, the buyer has a time limit of 30 days after purchasing the car to apply for a title transfer at the DMV and register the vehicle there. Failure to do so may incur late fees.
State DMV Locations and Bill of Sale
The table below shows the comprehensive DMV locations across the US and the corresponding car bill of sale template to download. You can look up your current location and find out the nearest DMV address to go register a car and request a certificate of title.
From what we’ve discussed so far:
- A car bill of sale is an essential document to have, even if the state doesn’t require it.
- A car bill of sale is a legal document highlighting the agreement between a seller and buyer to purchase a car.
- 16 states across the US would require a car bill of sale.
- In some states, a car bill of sale is needed for its registration at the DMV.
- Some states would require a notary to authenticate the bill of sale.