5 Tips for Buying a Car as a Gift

Buying a car for someone else? Think about what car would be best for the giftee, the insurance implications, and more.
Written by Rob Shapiro
Reviewed by Carrie Adkins
Buying a car for someone else, even as a gift, is different than buying a car for yourself. You need to think about what car makes sense for their lifestyle, the future obligations they will be saddled with, and the insurance implications specific to their situation.
Sure, a car is the ultimate gift. Remember, though, you are also giving someone the gift of responsibility. You’ll want to do your homework before even stepping onto a car lot. This way, you can find the right car for that special someone.
Jerry
offers tips for buying a car as a gift, so you can determine how to approach this situation, and also help the giftee
save money on insurance

Remember to shop for them, not you

Think about the person for whom you are buying the car. What would work best for them? Do they live in a city? Do they live in a condo with a parking spot? Ultimately, you don’t want to buy someone with kids a smart car, nor do you want to buy a city-dweller a van. 
Before you start shopping, ask yourself these questions:
  • What car suits their lifestyle?
  • How much space (backseat and trunk) might they need?
  • Are they capable of driving only an automatic car or can they drive a manual car?
  • What gas mileage will make sense for how much they drive?

Don’t forget future obligations

While a generous gift, a car comes with a steady diet of regular obligations. This shouldn’t be overlooked as cars are a big financial commitment. 
Whoever you’re gifting the car to, talk to them to confirm that they can comfortably afford the following costs:
  • Regular maintenance such as oil changes and brake inspections
  • Parking permits if they don’t have a driveway or garage
  • The installation and removal of winter tires
  • Car insurance  
There are other costs associated with cars but these are a good place to start.
Remember, it’s a gift. If the person you are gifting the car to can’t afford the responsibility, you might have to make a further commitment to help them.
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Make sure you and the giftee are on the same page

There are a lot of logistics that go into gifting a car. It’s a big gift, to say the least. While the surprise might result in a moment of happiness, it’s better to make sure you’re both on the same page.
Give thought to if the recipient even wants a car or if it will improve their daily life. Additionally, you should confirm if they have access to a parking spot. Lastly, if you are co-signing for a car, make sure the recipient understands that you are on the hook if they can’t make payments. 

Buy, co-sign, or co-borrow?

You will have a bunch of options for buying a car as a gift. 
One option is to buy it outright, which means the giftee will own it free and clear. 
Another option is for you and the other person to co-sign a loan. This means the giftee will get access to funds to buy a car, but you will be responsible to repay the loan if they do not. 
There is also the option to co-borrow a car. Essentially, this is a joint borrower scenario where both of you would agree to the loan. If the primary name on the loan defaults, then the other would be responsible for payment.

Give thought to insurance coverage

It’s important to think about—or even better, to have an open discussion about—the potential insurance implications of the car you are gifting someone.  
Remember the car you buy may impact their coverage and insurance costs. Review these factors to get an idea of what their insurance might cost:
  • The make, model, and year of the car
  • Where the giftee lives as insurance costs are predicated on location
  • The giftee’s potential usage of the car (road trips, long work commutes, etc.)
  • The giftee’s driving record
Granted, you won’t be able to calculate their insurance on their behalf. What you can do, though, is think about some absolute musts for their coverage. The best advice is to sit down with the recipient to discuss potential insurance costs and to confirm they are comfortable incurring this ongoing expense.  

Find affordable insurance

Once you’ve gifted the car, you can help them find the right coverage and the best rate for said coverage with car insurance super-app
Jerry
.
Jerry acts as your broker to compare rates from 50+ top insurance companies so you can enjoy big savings on a policy that’s just right for you. The average Jerry user saves $879 a year on their car insurance!
“After signing up with
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FAQ

There’s no easy answer to this question as it’s dependent on a state’s tax laws. In some cases, gifting a car can bypass sales tax. In other cases, selling the car for $1 as a formality means no taxes, but you need to prepare and submit the appropriate documentation.
You need to transfer the title. This process varies based on the state where the transfer is happening. Make sure you do proper research for the appropriate state.
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