is a great way to avoid the hassle and fees of a private vehicle sale, but you should bear in mind that even when gifting, you will still need to pay for things like the

title transfer

and registration fees. You’ll also need to file all the correct paperwork to certify that the vehicle is a gift.

Whether you’re gifting a new or used motor vehicle, the gesture of covering the costs of a car for someone else is a generous one. But a lot goes into gifting a car to a friend or family member, especially since each US state has its own set of rules and regulations when it comes to vehicle gifting.

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How to buy a car as a gift in Arizona

If you want to gift someone a brand-new car, it’s best practice to involve the recipient in the

car buying process

. This will ensure that the giftee is receiving a vehicle that suits their needs and personality and that the vehicle you purchase fits their budget when it comes to ownership costs like car insurance and maintenance.

You’ll also need to make sure that the vehicle you select is within your budget. You’ll have to cover the costs of the purchase in full because you can’t gift a car with outstanding liens. Alternatively, you can apply for a lien release from your lien holder. This will allow you to transfer any outstanding lien amounts to the recipient of the vehicle.

If the car you are gifting is for a family member who has only just got their driver’s license, it is important to make them part of the car buying process. This way, the recipient will still have a say in what vehicle they want as their first car without worrying about financing a vehicle themselves.

Key Takeaway To transfer a vehicle as a gift, you’ll need the Arizona title in hand. For this reason, bringing the recipient along to the dealership is a great idea—especially if you’re gifting a new car.

MORE:

How to buy a new car

How to gift a used vehicle in Arizona

If you’d rather surprise your giftee with a grand driveway reveal of their new car, you're better off transferring ownership of a vehicle that you already own than financing a new one. This will protect you from purchasing an expensive model that your recipient cannot afford to maintain.

The pre-owned car can still be a relatively new model—especially if you can purchase the car outright. Similarly, if you’ve paid off your

car loan

on a slightly older model, you are all set to gift the vehicle to a new recipient.

Whether you choose to gift a new car or a used model, the process is generally the same. Here’s what you’ll need to do to gift a car in Arizona legally.

Negotiate the terms of the gift with your recipient

After the excitement of the gift dies down, you’ll need to sit down with your recipient to discuss the details of the gift. This will involve determining who is going to be responsible for the title transfer fee as well as things like maintenance, insurance, and repair costs for the vehicle.

In Arizona, you’ll only have to pay $4 for a title transfer fee, plus an $8 registration fee. At just $12 in total, it’s relatively cheap to transfer a vehicle in Arizona.

You’ll need to talk about who is going to be responsible for the retitling fee and costs related to

basic car maintenance

, insurance, fuel, and any other expenses associated with the car. If the vehicle will be a financial burden on the recipient, you may want to reconsider the amount of fees you are asking them to take on.

Here’s a table of the costs that you should discuss with your recipient:

Expense	Average cost in Arizona
Title transfer	$4
Vehicle registration fee	$8
Insurance	$1,734 per year (liability only) $2,236 per year (full coverage)
Maintenance	$1,118 per year
Fuel	$3,000 per year

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Record of the gift with a bill of sale

Even when gifting a car, completing a

bill of sale

will help to protect you financially and legally in the unlikely case of complications later down the line. Even though there is no money being exchanged in the gifting process, an Arizona bill of sale serves as a legal record of your transaction.

The bill of sale must be signed by both you and your recipient, certifying that you’ve mutually agreed to the terms of the gift.

Transfer the vehicle title

The final step in the car gifting process is to complete the Arizona title transfer for the vehicle. By successfully transferring the car’s title out of your name and into the recipient’s name, they will assume full legal ownership rights to the vehicle.

You will need to complete a vehicle title transfer document (

Form 96-0236

) for your giftee to move forward. The recipient will then need to visit their local Arizona Motor Vehicle Division (MVD) office in person with the following:

Completed car title transfer form

Proof of Arizona residency and US social security

Proof of vehicle inspection (and possible emissions testing, depending on where you live in Arizona)

$4 title transfer fee

VIN and odometer reading

While at the DMV (or, more accurately, the AZ MVD office), they’ll also get new license plates and vehicle ownership documents.

Keep in mind that if you’re gifting an out-of-state vehicle to an Arizona resident, the title transfer process might involve a few extra steps. The Arizona MVD will be happy to walk you through the process.

Purchase Arizona liability insurance—or full coverage

Having a valid Arizona car insurance policy is vital even when you’re gifting a car. In some cases, the original owner of the vehicle must have valid auto insurance before they are allowed to transfer the title at all.

The recipient should add the vehicle to their insurance policy as soon as possible after the title transfer process is complete. Once your vehicle is insured, the gifting process is complete, and the new owner is free to take to the streets in their new car!

MORE:

Registering your car in Arizona