Gifting a Car in Iowa
As long as you’ve got the vehicle title, you can gift a car in Iowa by filling out the seller’s portion of the transfer section of the title.
Written by Ethan Moser
Reviewed by Kathleen Flear
If you want to avoid the hassle and fees of a private sale of your vehicle in Iowa, or if you want to surprise a friend or family member with a new car, gifting your vehicle might be a great option for you. While you’ll still need to pay for things like the title transfer and registration fees, as well as file all the correct paperwork to certify that the vehicle is a gift, the gifting process is generally quite simple.
Whether you're passing on a used car or covering the cost of a new one, gifting a vehicle is a generous gesture that will leave you and the recipient feeling great. That being said, you’ll want to make sure you are following all of the correct procedures, especially seeing as there are different rules for gifting vehicles in every state.
Thankfully, the
car insurance
comparison app Jerry
is here to walk you through the steps of gifting a vehicle with this comprehensive how-to guide that will help you avoid common mistakes and make the most of your gift. Plus, we'll cover some tips to help you find the best Iowa car insurance
.How to buy a car as a gift in Iowa
If you’re planning on buying someone a brand-new car as a gift, it is best practice to bring them with you to the dealership when you shop. This will not only ensure that the giftee is getting a car that suits their needs and personality, but it will also help make sure that they aren’t in over their head in terms of the additional costs related to car ownership like insurance and maintenance.
Best-case scenario, you’ll want to purchase the new vehicle outright. This is because you cannot
transfer the title of a vehicle
to another person if there is a lien
on it (i.e., you owe money on a car loan). In the case that you must finance the purchase, you should probably involve the giftee in the car-buying process. You can still accept responsibility for paying off the car loan, but you can also include the recipient on all the vehicle’s paperwork. Otherwise, you won’t be able to transfer the title to them until you have fully paid back the loan.
Key Takeaway In order to transfer a vehicle as a gift, you’ll need the title in hand. Because of this, bringing the recipient along to the dealership is a great idea if you’re gifting a new car.
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How to gift a used car in Iowa
If you’re gifting a vehicle as a surprise, purchasing a new car may be more trouble than it’s worth. Instead, you could gift a gently used model that you can afford to pay for outright. That way, you’ll have a free and clear title that’s able to be easily transferred to the recipient.
This method will help to avoid financing snafus common with gifting a brand-new model.
Alternatively, maybe you plan to gift your current vehicle and buy a new car for yourself. This will also make for a smooth gifting process—so long as the car is paid off.
Either way, here’s what you’ll need to do to legally gift a car in Iowa.
Negotiate the terms of the gift with your recipient
Whether you’re involving the recipient in the buying process or surprising them with a grand driveway reveal, it’s important to sit down with them to discuss the terms of the gift after the excitement dies down. You’ll need to talk about things like title transfer fees, insurance, maintenance, fuel, and repairs costs—and who is going to be responsible for them.
In Iowa, a title transfer requires a $25 retitling fee when gifting a car. To verify what other fees might be involved, you may want to contact your local DMV and explain the situation.
Discuss the financial responsibilities of owning a car with the gift recipient so that they don’t come as a surprise later on. You wouldn’t want the vehicle to become a financial burden—basically defeating the purpose of the gift.
Here’s a table of the costs you should go over with your recipient.
Cost | Iowa average |
|---|---|
Title transfer | $25 |
Registration fee | $90 (models 1-5 years old), $65 (models 6+ years old) |
Insurance | $1,522 (liability only), $1,685 (full coverage) per year |
Maintenance | $1,186 per year |
Fuel | $3,000 per year |
Record the gift with a bill of sale
Even when gifting a car, you’ll still need to complete a bill of sale. Although there may not be a monetary exchange, an Iowa bill of sale serves as a legal record of your transaction. This will be a necessary document in the unlikely case that legal complications arise down the line.
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
Transferring the vehicle’s title out of your name and into the name of the giftee is the action that will complete the gifting process. Once the title is in the recipient’s name, they will have full legal ownership rights to the car.
To complete a title transfer in Iowa, you will need to fill out the seller’s portion of the transfer section on your car’s title, while your giftee fills out the buyer’s portion. The recipient will then need to visit their local Iowa MVD office with the following:
- Proof of Iowa residency
- Proof of Social Security number
- Signed and completed Iowa title, Application for Certificate of Title, and/or registration (Form 411007)
- $25 title transfer fee
In Iowa, note that any vehicle transfer is tax-exempt.
Purchase Iowa liability insurance—or full coverage
Even if you’re leaving the cost of car insurance up to your giftee, it is important to make sure that your gifted car has insurance that adheres to
Iowa car insurance laws
. Once your vehicle is insured, the gifting process is complete and your giftee is free to take to the streets in their new car!“Jerryquoted me a price that saved me almost $4,000 a year in Iowa! I definitely recommend Jerry.” —Patricia B.
How to find affordable car insurance in Iowa
Whether you’re insuring your new car or helping your giftee find insurance for theirs, saving money on your car insurance policy has never been easier than it is with the help of insurance broker super app
Jerry
. Saving with Jerry is simple: just download the app, enter your information, and Jerry will scan quotes from more than 55 of the top insurance providers in less than 45 seconds, delivering the best
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FAQs
Do you have to pay taxes on a gifted car in Iowa?
Not usually! Under Iowa law, recipients of gifted vehicles are almost always exempt from paying taxes on the transferred vehicle.
Is it better to gift a car or sell it for $1 in Iowa?
There’s a reason why the Iowa MVD has a process for gifting vehicles. If you’re not planning on selling your car at a fair market price, gifting it is the safest and most legitimate way to transfer your vehicle’s title to another owner.
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