When You Sell Your Car
Getting payment: Cold, hard cash is the easiest way to collect payment for a used car. The buyer might request a receipt for the cash. If you provide a bill of sale, this will serve as a receipt. When cars are sold for amounts over $2,000, a cashier's check is recommended. When cars are being sold remotely, you can use an escrow service to facilitate the transaction. The escrow service essentially verifies that the funds are paid and transfers them from the buyer to the seller.
It's unwise to accept a promise of future payment from a buyer, even if it is someone you know. If the car is wrecked, the new owner's motivation to pay you back plummets. You are well within your rights to refuse to float loan payments, and in most cases the buyer will understand and quietly back down.
Limiting your liability: What if someone drives away in the car you just sold and gets into an accident? Can you be held responsible? There are two ways to deal with this concern. First, record the odometer reading, and sign the car's title over to the buyer. Second, in most states, a release-of-liability form can be downloaded from the registry of motor vehicles website. This story has links to the different Departments of Motor Vehicles.
Managing complications: What if the buyer calls the next day and wants you to take the car back? Or what if the buyer claims you didn't reveal something about the car or that a mechanical problem has been discovered?
Both buyer and seller should keep in mind that most states assume a used car is being sold "as is." That means there are no promises or guarantees after the sale is concluded. If you are a buyer, it's imperative you thoroughly inspect the car before purchase. Sellers can head off trouble by encouraging buyers to have an inspection.
Car Seller's Checklist
- Have a smog test performed (if required in your state).
- Fill out a release-of-liability form, including current mileage, and file it with the DMV.
- Provide maintenance records (if available) to the new owner.
- Receive payment in cash, by cashier's check or, if selling remotely, through an escrow service.
- Take the license plates off the car (if required by your state).
- Remove personal items from the glove compartment and other storage areas.
- Hand over both sets of keys to the new owner, along with any warranty papers for the car, the battery, tires, etc.
- Cancel insurance for the car.