How to Gift a Car
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- Part 1 of 4: Do your due diligence
- Part 2 of 4: Purchase the vehicle
- Part 3 of 4: Create a bill of sale
- Part 4 of 4: Complete a transfer of title
Gifting a vehicle is a generous act, and you shouldn’t have to give too much of your time in addition. We’ve compiled a straightforward list of the actions and considerations that go into gifting a vehicle in the majority of U.S. states. In this article, Part 1 encourages you to figure out what needs to be done before you can give away a car, Part 2 warns you about buying a vehicle on a payment plan if you’re going to give it away, Part 3 tells you how to create a bill of sale, and Part 4 explains how to transfer a title.
Part 1 of 4: Do your due diligence
Cars make wonderful gifts, but they aren’t necessarily the simplest item to give away. To keep things running smoothly, you need to do your due diligence. There are two sides to due diligence. First of all, you need to make sure the person receiving your gift understands what is and is not included in the gift. Who will be paying to transfer the title? Who is paying for insurance? Ironing these kinks out before you visit the DMV will help the entire process go much more smoothly. It will also limit complications down the road.
The second part of due diligence requires you to examine the vehicle’s history. Are there any liens on the vehicle? What condition is it in? Are there extra fees involved due to storage? Buying a vehicle will inevitably cost more than the sticker price. To give a good gift, you need to understand and investigate these costs before they undermine your generosity.
Part 2 of 4: Purchase the vehicle
Obviously, this step doesn’t apply to anyone giving a vehicle they already own. It’s somewhat traditional to pass on the older family vehicle to new drivers when the adults buy a replacement. However, if you’re buying a new or used car as a gift, this is obviously an important step in the process.
Ideally, you should complete all of your due diligence before you buy the gift. If you’re worried about ruining the surprise, just remember that there are worse kinds of surprises. You can also discuss things like insurance and fees casually in the months or weeks leading up to your purchase.
Buying a vehicle through a payment plan adds an unnecessary level of complication. While this method works well for buying your own vehicle, it’s hard to give away something you haven’t entirely paid for. This means you either have to retain the title or work out some kind of secondary collateral with the car dealership. Since most car dealerships aren’t interested in collateral apart from your vehicle, which they can reclaim very easily if you fail to make payments, this leaves the first option.
If you are giving your gift to a minor, it might make sense to retain legal ownership of the car for a few years. Either way, it’s best to pay for the vehicle in full before you transfer the title. If you don’t, you may find yourself in a sticky legal situation.
Part 3 of 4: Create a bill of sale
Even though you aren’t really selling the vehicle, transfer of title in many states requires an official bill of sale form. At the very least, it closes a few legal loopholes to protect the recipient of your gift. Make sure to check with your DMV in advance and fill out as much of the paperwork as possible in preparation for the big reveal.
Since driving regulations vary by state, ask your DMV if there are any specific rules about gifting a car in your region while you’re there to pick up the paperwork. You may find that your county or state has specific rules about how to fill out specific values in the bill of sale to prevent confusion in the case of resale. It’s always better to be safe than sorry.
Part 4 of 4: Complete a transfer of title
Once you’ve completed all of the above steps, it’s time to visit the DMV again, this time with the recipient of your generous gift. Transfer of title is a pretty simple process in most states. To ensure things go smoothly, there are a few things you should bring with you:
- Drivers’ licenses for both you and the recipient
- The completed bill of sale
- The vehicle in question
- Proof of insurance
- Cash, checks, or debit cards (check to see what your DMV accepts)
- Note: Always check with your local DMV before going in to ensure you don’t make a wasted trip.
Giving away a car, whether to a teenager who just got their license or to a friend in need, is a generous gesture and the process shouldn’t be a headache for either you or the recipient. Follow the above protocol and your benevolent act will bring you well-deserved satisfaction.