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Gifting a Car in Illinois: Gift and Transfer Guide

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Zachary Morgan
· 4 min read
To give a car as a gift in
Illinois
, you’ll need to transfer and register the title and fill out a form RUT-50 for tax exemption purposes. You will still have to pay a few minor title transfer fees.
  • In Illinois, you can only give a car as a gift to a family member.
  • If you want to gift someone a car in Illinois, you’ll need to own the vehicle with a free and clear certificate of title—it can’t be held by a lien holder.
  • If you’re financing a car to give to someone, you’ll need to leave it in your name until it’s paid off, or cosign the loan so it’s in the recipient’s name.
  • Make sure you and the recipient sit down and decide who’ll be responsible for the fees and expenses of owning a car.

How to buy a car as a gift in Illinois

Bringing the recipient to the dealership with you is the simplest way to gift a motor vehicle. The person can pick out the car they like and make sure it’s something you both can afford in the long term. 
Remember that a car that still
has a lien
or outstanding
car loan
payments cannot be given as a gift. All payments must be made before you complete the car title transfer. 
In addition, cars can only be given as gifts to family members in the state of Illinois.
Key Takeaway If you’re giving a new car as a gift, make the process easier by bringing the recipient to the dealership with you. 

How to gift a used car in Illinois

If you plan on surprising your recipient with a gifted car, transferring a vehicle you already own is the easiest way. It doesn’t matter if it’s a beat-up
Oldsmobile
or a shiny new
Honda
; you can still gift it provided there are no payments remaining on it.
The process is the same for giving someone a car you don’t need anymore. Follow the steps listed below to legally gift a car in Illinois.

Negotiate the terms of the gift

Once the excitement of your gift has died down a little, take a moment to discuss the finer details with the car’s new owner. There will still be costs and payments to make, so it’s important to decide who will be responsible for them. 
The Illinois DMV requires two fees for a title transfer: a $95 transfer fee and a $15 alteration fee (required to change the name on the certificate title) for a total of $110. Residents of certain counties will also have to pay for a $20 smog check.
Between you and the recipient, decide who will pay for the title transfer process as well as the ongoing costs for car insurance, maintenance, and fuel.
Here’s a table of the fees you and your recipient should consider.
Cost
Illinois average
Title transfer
$110
$101 (plus $25 if you want to transfer the license plates)
Insurance
$547 (liability only)
$1,058 (full coverage) per year
Maintenance
$1,186 per year
Fuel
$2,466

Record the gift with a bill of sale

Although you’re gifting the vehicle (for free!) in a sort of private sale, you still need to record the transaction with a bill of sale. An
Illinois bill of sale
acts as a permanent legal record of the exchange, protecting you from any legal disputes in the future. 
Make sure the report of sale is signed by you and the recipient to demonstrate that you both agreed to the terms of the gift.

Complete an Illinois title transfer

The title transfer is the most important part of the car gifting process. It is what officially grants ownership of the vehicle to the recipient.
You—the current owner of the vehicle or “seller”—and the recipient (the “buyer”) need to fill out and sign the vehicle title. You must also record the odometer reading and the car’s VIN (vehicle identification number).
Next, contact your
IL SOS office
to obtain a VSD-190 title transfer form and a RUT-50 tax form. Visit your nearest Secretary of State office or contact them over the phone at 800-252-8980 to obtain the forms, as they are not available online.
Once that is done, you have to visit an Illinois Secretary of State office in order to file the paperwork and pay the fees.

Make sure the car is covered by Illinois car insurance

Before you send your giftee out on the open road, make sure their vehicle is covered with a
valid Illinois insurance policy
. After that, your recipient can enjoy both their new car and the peace of mind that comes with being properly insured.
Jerry
got me out of a bind! I bought a new car, and my existing insurance raised my prices and didn’t budge. Thankfully, Jerry got me an affordable rate without me waiting for phone calls all day.” —Felicia M.
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FAQs

Nope! Under Illinois law, you’re not required to pay use tax on a vehicle you receive as a gift. Just fill out the forms and pay the transfer fees and you’ll be good to go.
If you’re not going to sell the vehicle at market price, then gifting is the way to go. Illinois sales tax (6.25%) is only paid at the time of purchase, so if you gift a car worth $20,000, you will save $1,250!
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