by Armando Martinez
When selling your car privately, transferring the car's title to the buyer is one of the most important components of the sales process.
Transferring a car title is not always straightforward. Do you even need a car title to sell your car? What documents should you prepare in advance?
This guide explains what to do with your title when selling a car privately and how to transfer title ownership so you can be prepared for a successful sale.
What To Do With Your Car Title When Privately Selling
A car title is a document that legally proves you own the vehicle. It has your name, address, and other important information about the vehicle. There is also space on the document for the new owner's information.
In most cases, you should sign the title to the new owner if you're selling your car. Doing so allows them to register the vehicle in their name. You may also have to send a notice to your state's department of motor vehicles (DMV) informing them of the ownership transfer.
If you're wondering how to sell a car privately without a title, that's typically not possible. The only way to legally sell a car is to have proof of ownership in hand. So if you don't have the title, you can either get it from the previous owner or contact your local DMV to find out what is needed to apply for a duplicate title.
Why Is Transferring the Title Important When Selling a Vehicle Privately?
The car title is a legal document proving ownership of a vehicle. Therefore, transferring it at the time of sale helps you avoid future legal complications in case the vehicle is involved in an accident or crime. Plus, the new owner won't be able to register the car in their name until the title is transferred to them.
To transfer the title, the DMV will give you a release of liability form. This document protects you from being held liable for future incidents after selling the car, so keep it in a safe place. For example, suppose you sell your car, and the new owner gets into an accident six months later. If the title wasn't transferred, you could be held liable because your name is still on the title. Contact your state's DMV to learn when you should file the release of liability form.
Additionally, your state may require you to file a notice of transfer or sold notice with your DMV immediately after selling your vehicle. A sold notice ensures that the DMV and law enforcement have a record of who currently owns the vehicle. For example, if the car is abandoned in a state that requires a sold notice, the previous owner may still be listed as the current owner and could get the bill for towing and other fees if they have not created or updated the notice.
How a Private Sale Car Title Transfer Works Traditionally
Title transfer involves a few crucial steps that are consistent across all states. Here are the key things you should do to transfer your car title successfully.
Get an Accurate Odometer Reading
The odometer reading indicates how many miles are on the car and is necessary for multiple documents within the title transfer process.
You must provide an accurate odometer reading for two reasons. First, the buyer must know how much wear and tear the car has experienced thus far. Second, federal law requires the Motor Vehicle Division to refuse the transfer of vehicle ownership unless the seller has disclosed the odometer reading.
Create a Bill of Sale With the Necessary Info
The bill of sale is a document transferring vehicle ownership from the seller to the buyer. Both parties should sign the bill of sale, and it should include the following information:
- The names, addresses, and signatures of both the buyer and seller
- The date of the sale
- The vehicle record, including the make, model, vehicle identification number (VIN), and mileage
- The sale price
You'll also include the odometer reading and payment details in the document. For instance, you will likely write down the final sale price of the vehicle and whether it was paid in full or in separate payments.
In case there's ever a dispute, a judge will look at the bill of sale to see which terms the parties agreed on. While you have the option to sign one in any state, the following states require you to have a bill of sale:
- Alabama
- Arkansas
- Colorado
- Connecticut
- Hawaii
- Idaho
- Maine
- Nebraska
- New York
- Ohio
- Rhode Island
- South Dakota
- Vermont
- Washington
- West Virginia
- Wyoming
A bill of sale must be notarized in Louisiana, Maryland, New Hampshire, Nebraska, West Virginia, and Montana.
Take a Trip to the County DMV
Once you've completed the bill of sale, you and the buyer will take the signed form to the DMV. Your state’s DMV will then issue them a new title and registration in their name.
Here’s what you need to take to the DMV:
- The bill of sale
- Proof of insurance
- The odometer reading
- The application fee
Both parties should go to the DMV or notary office together. Doing this can avoid certain risks, like a buyer failing to transfer the title to their name properly.
Fill Out an Application for Title Transfer and Registration Forms
The next step is to fill out an application for title transfer and registration. The form will ask for the car's information, such as the make, model, and VIN. It also requires you to list the car's purchase price and odometer reading.
If you are still paying off a loan for the car, you also have to add a lender affidavit to the documents. This will show proof that the lender knows about the change in vehicle ownership.
However, the lender may not permit you to transfer the vehicle unless you have paid your loan in full. If you haven't done so, you'll have to pay off the loan before transferring the title.
Buyer Signs All Documents
The buyer will then sign all the documents, including the title transfer and bill of sale. In some cases, the buyer may have to sign the odometer and damage disclosure statements.
Pay Any Transfer and Title Fees
Once you have finalized all the documents, the buyer will pay a fee to transfer the title and register the car. Fees vary by state but are usually less than $50.
The fee is based on the car's weight and value. In some states, you have to pay an annual registration fee. You can find the registration fees for all states here.
States with recurrent fees include:
- Alabama: $50 annually
- Connecticut: $80 for two years
- Massachusetts: $60 for two years
Cancel Motor Vehicle Insurance Once the Car Is Sold
If your insurance company doesn't allow you to transfer the vehicle's current policy to the new owner, you'll need to cancel it. You can do so by calling your insurance company or contacting them on their website. Make sure you cancel the policy on the day of the sale so you won't be held liable for accidents after the car is sold.
However, if your insurance company does allow you to transfer your insurance policy to the new owner, you should include the proof of insurance in the bill of sale.
This article was written by Armando Martinez. Armando Martinez is among the nation’s experts on automotive titling, registration, DMV services and document operations. With nearly two decades of experience across a broad range of financial services functions and some of the largest names in auto, from Wells Fargo to Uber, Armando combines vision and ingenuity with a wealth of information so auto shoppers and sellers can learn from his experience.
