If you want to “wow” someone with a generous present that can change their life, think about gifting a car. Giving the gift of a car is more involved than buying someone a new laptop, but it makes more of an impact, too. However, every state has different regulations surrounding the process.

To avoid complications, use this guide from the

car insurance

comparison shopping app

Jerry

. Here, we’ll go over how to gift a car, what to avoid, and the types of fees and expenses you can expect.

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How to buy a car as a gift in Vermont

If you want to gift someone a brand new car, you may want to bring the recipient to the dealership to help you with the shopping process.

Keep in mind that you can’t gift a car with a

lien

on it. You’ll need to hold the title free and clear in order to transfer it. That means, in order to give the recipient sole ownership of the vehicle, it will need to be purchased outright, not with a loan.

If you can’t afford to gift a brand new car by paying for it in cash, it’s probably best to include the gift recipient in the process of financing the car. For instance, you could cosign on a

loan

and accept responsibility for paying it off.

This way, the giftee’s name can also be included on all of the paperwork associated with the vehicle (e.g., title,

registration

, so on).

Key Takeaway You need to own a car outright in order to transfer the title, so it might be best to bring the gift recipient with you when shopping for their new car.

MORE:

How to buy a new car

How to gift a used car in Vermont

There’s something to be said about waking up on Christmas morning with a new ride in the driveway. So if you can’t buy it outright, getting a brand new car to give as a gift may not be the best route.

For many, purchasing a used vehicle in cash is much more doable. It will also make

transferring the vehicle title

to the gift recipient a lot easier. This method doesn’t mean you have to gift someone an old, beat-up car—you can transfer any car you’ve paid off or a recent model you bought outright.

If you don’t care about creating a special moment and just want to pass on a car you currently own to help out someone special, the method of gifting the vehicle is the same as if you bought a new ride.

Read on to find out the next steps.

Negotiate the terms of the gift with your recipient

Yes, the car is a gift—but there are additional costs involved. Transferring the title means paying fees, in addition to the regular anticipated costs of owning a car.

In Vermont, there are a few different title fees to keep in mind. There’s the typical title transfer fee of $35. But there are additional fees for more complicated title transfer requests, like $35 for a clear vehicle title after lien removal. Check with the DMV to see exactly which fees you’ll be responsible for.

Discuss who is going to pay the fees, as well as who’s responsible for car maintenance, car insurance, fuel, and any other costs owning a car can rack up. You don’t want to “gift” someone a surprise financial burden!

Record of the gift with a bill of sale

Yes—you’ll need a bill of sale even though you’re gifting the car. This is an official and legal document that formally transfers ownership from you to the recipient. This is important because it could save you potential legal headaches in the future.

You’ll need to fill in the price as $0 in the appropriate area on the bill of sale. Usually, a 6% sales tax applies to cars that are sold in Vermont. However, if a family member gives a car as a gift to another family member, you are exempt from this—so long as you

fill out the necessary forms

Transfer the vehicle title

You’ll need to transfer the title after recording the bill of sale so the recipient can register the car.

There are multiple forms you will need to gather and submit to the

Vermont DMV

to transfer the title, including:

Bill of Sale

(VT-005)

Gift Tax Exemption (VT-013)

Registration/Tax/Title Application (VD-119)

Verification of VIN/HIN (VT-010)

Submit all these documents plus the necessary title fees to the Vermont DMV. Once the vehicle title is transferred, the recipient will be ready to register the vehicle under their name.

MORE:

What is a certificate of title?

Purchase Vermont liability insurance—or full coverage

Finally, make sure the gifted vehicle is insured with the required

Vermont insurance minimums

. Insurance is a necessary part of owning a vehicle, and the recipient won’t be able to drive legally without it!

Liability coverage is mandated by almost every state, including Vermont. But if a car owner’s budget allows,

full-coverage insurance

is better.

“Super cheap!
Jerry
saved me over $4,500 during the entire year. The money really adds up.” —D’Shawn G.

How to find affordable car insurance in Vermont

Maybe the gift recipient has never had to shop for car insurance before. If they turn to you, what are you going to tell them? To call around multiple companies and give the same information over and over, just to get inflated quotes that are unaffordable?

Instead, tell them to download the

Jerry

app. Jerry will scan quotes from top insurance providers and deliver the best deals straight to you. Once you find something you like, Jerry will take care of the rest—securing the new policy and even sending you new quotes when it’s time to renew.

Thanks to Jerry, you can turn your car gift into a two-for-one special: a car and cheap insurance! The average Jerry user saves $887 a year.

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FAQs

Do you have to pay taxes on a gifted car in Vermont?

Yes, you do have to pay taxes except in one circumstance. You do not have to pay the 6% sales tax on the car’s value if you are gifting the car to a member of your family.

Is it better to gift a car or sell it for $1 in Vermont?

Gifting a car or selling it for $1 in Vermont doesn’t make a difference. If you are gifting the car to someone outside of your family, the sales tax will be determined by the value of the car, not the sale price.

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