Selling your car to a private buyer can sometimes earn you more than trading it to a dealership. While the added return is an excellent incentive, it is essential to note that this transaction requires that you draft your own car sale contract. This document records the terms of the sale between you and the buyer, so you have proof of the exchange of ownership. It is fairly easy to prepare, and this article will help you draft an effective document.
What Is a Car Sale Contract?
A car sales contract is a formal document that records the purchase and sale terms agreed upon by the buyer and seller of a vehicle. It identifies the buyer and seller and describes the car and conditions of sale. Once signed, this document becomes a binding agreement between the two parties and serves as legal proof of the transaction.
Essential Elements of a Car Sale Contract
Generally, car sale contracts record all the agreements made by the buyer and seller during the sale of a used car. While individual documents will vary across transactions and jurisdictions, the contract typically consists of the following elements:
- The agreement date (when the contract was prepared).
- Buyer and seller names, contact information, and mailing addresses.
- Sale details, including the date of sale, purchase price, and payment method.
- Vehicle characteristics like make, model, year, color, VIN, and odometer reading.
- The delivery details (method, cost, and responsibility).
- The buyer and seller signatures and signature dates.
Car Sale Contract Templates & Examples
How to Write a Car Sale Contract
The biggest benefit of selling a car to a private buyer is that you will probably get the best price this way. However, this advantage comes with a downside: you have to prepare your own Car Sale Contract. Fortunately, this is fairly easy to do if you know the steps to take:
Step 1: Identify the Parties
Indicate the current date at the top of the page: this will be the official agreement date. Below it, start by identifying the seller and buyer by their full legal names, referring to their government-issued IDs and their current mailing addresses. You should also state that the document is a car sale contract.
Tip: Every state has its own guidelines on the information to include in a sale contract, so contact your local DMV to find out what other details you need.
Step 2: Describe the Vehicle
Next, describe the vehicle as best as you can to avoid misinterpretation of what vehicle is being sold. Note the make, model, year, color, interior color, body type, Vehicle Identification Number (VIN), odometer reading, and any other characteristics.
Note: All the descriptive information about the car should be truthful and accurate, else you risk voiding the contract.
Step 3: Supply the Purchase Terms
State the agreed-upon purchase price, payment method (money order, cash, cashier’s check, etc.), and date of sale. Mention whether the purchase price includes taxes – again, refer to state laws to find out if you must charge sales tax.
Step 4: Describe a Delivery Method
In case the buyer and seller don’t live in the same locale, explain how the car will be delivered to the former. Possible options include delivery by driver, pick up by buyer, and shipping. You should also mention any applicable delivery fees and the party liable to pay them.
Step 5: Describe the Condition of Sale
Is the car being sold with a warranty or ‘as-is’? Most private sellers use the latter option to limit their liability if the car develops a problem. If this is the case, include a clause specifying that the driver ‘makes no warranties about the car’s condition.’
Step 6: Mention the Included Documents
List all the documents you will be handing over to the buyer upon completion of the sale, such as the title and service records.
Important: A car has to have a clear title to be sold, which means it should not hold any liens, loans, or legal liabilities. This is unless the buyer agrees to purchase a financed vehicle and deal with the lender themselves.
Step 7: Sign the Contract
Finally, if each party is satisfied with the contract, have them sign and date it. Consider getting a witness and notary to sign the document as well. When this is done, make and maintain a copy of the contract.
Tips for Selling Your Car Smoothly
- Provide as many material characteristics of the car as possible.
- Never make inaccurate claims when describing the car.
- When advertising the car, describe the condition of sale, including whether it requires repairs or is being sold for spares.
- Always include the number plate of the car being sold, your location, and the amount of time left on the MOT.
- Avoid sharing personal details or information such as the car VIN over the phone or email with people claiming to be buyers. Ask them to come and view the vehicle instead.
- Prepare all the relevant documents required to complete the sale of the vehicle.
- Avoid letting potential buyers take pictures of or make copies of these documents.
- If you have a stamped dealer service record, add it to your document file as it could increase the sale value.
- Research similar vehicles being sold in your area and come up with a realistic selling price. You can also speak to a local appraiser.
- Set your advertising price at a little higher than your intended selling price to allow yourself enough room for haggling.
If your car has outstanding finance, consider settling it with the lender, as you can only sell a vehicle with a clean title. This means that the car should be clear of any liens, debts, and encumbrances.
- Arrange the test drive at your home address or in a neutral location.
- Always ask for and check the authenticity of the contact information of potential buyers that would like to view or test drive the car.
- When the driver arrives for the test driver, ask for their government-issued ID to confirm the information they sent you.
- Request that the buyer show you a valid driving license before test driving the car.
- Ask the driver to show you their insurance coverage.
- To protect yourself from car theft, ask a friend or family member to accompany you on the viewing or test drive.
- Never let the potential buyer test drive the car alone.
- Always keep the car keys with you when changing seats with the potential driver and give them back to the driver when you are inside the vehicle.
Sale and Payment
- If you choose cash as a payment method, consider scheduling the exchange to happen at your bank or through an online bank transfer.
- Never accept ‘funds’ from a buyer from overseas looking to buy your car without viewing it.
- Don’t hand over your car until you confirm that the buyer has paid the purchasing price in full.
- If you receive payment in the form of a personal check, building society check, or banker’s draft, wait for it to clear before handing over the car.
- If the payment is being held in escrow by a third party, confirm that the company is legitimate.
- Always provide the buyer with a receipt indicating the car was sold as seen, tried, and approved with no guarantee from the seller.
- Understand that this receipt does not negate the buyer’s legal rights, and you must be honest about the car’s roadworthiness and description.
Frequently Asked Questions
Why is a used car sales agreement important?
A used car sales agreement records the true and accurate description of the vehicle and title status. It also serves as legal proof of the purchase and sale transaction and can be used to defend your rights if a dispute ever arises over the engagement of ownership.
Do you need a contract to sell a car?
Yes. In the United States, you cannot transfer a car’s title – even though a private transaction – without a bill of sale. A car bill of sale is a simplified version of the car sale contract.
Can I cancel a car contract after signing?
According to the Consumer Law Group, signed car sale contracts are very difficult to cancel. However, you might be able to get out of a contract if the seller misled you, failed to disclose the car’s complete history, did not disclose a mechanical issue or the car failed a safety inspection. Consult a contract attorney who can go through the agreement and advise you accordingly.
How can I get out of a car contract?
If the contract terms don’t give you the ability to cancel the agreement, you should contact the seller to discuss your situation. It is up to the dealer to either agree to or challenge your cancellation request, which will dictate your next step. If they agree, you may need to pay a fee (mentioned in the contract). If they don’t, you might need to hire a contract attorney.
Whether you are buying or selling a used car through a private transaction, you will need to prepare and sign a Car Sale Contract to record the terms of the exchange. Once signed, this document serves as legal proof of the purchase and sale and becomes a legally binding agreement between you and the party. You should check that it presents a true and accurate account of the exchange before affixing your signature. You should also maintain a signed copy.