How to Properly Fill Out a Car Bill of Sale

Quick answer

• Gather all necessary information about the buyer, seller, and vehicle before starting.
• Accurately record the sale price, date, and any included conditions.
• Ensure both buyer and seller sign and date the document.
• Understand that a bill of sale is often required for vehicle registration and title transfer.
• Keep a copy for your records, and provide one to the other party.
• Consult your local Department of Motor Vehicles (DMV) or equivalent agency for specific requirements.

Who this is for

• Individuals buying a used car from a private party.
• Individuals selling a used car to a private party.
• Anyone needing to legally document a vehicle sale for registration or insurance purposes.

What to check first (before you act)

Your Goal and Timeline

Before you start filling out any paperwork, clarify why you need this document and when the transaction needs to be completed. Is this for a casual sale between friends, or is it a formal transaction that requires immediate registration and title transfer? Understanding your timeline will help you prioritize the steps and ensure you have all necessary information ready.

Current Cash Flow

If you are the buyer, assess your current financial situation. Do you have the funds available for the purchase price, taxes, registration fees, and any immediate maintenance? If you are the seller, ensure you have a clear understanding of the agreed-upon sale price and how you will receive payment.

Emergency Fund or Safety Buffer

Owning a vehicle comes with unexpected costs. As a buyer, ensure you have an emergency fund in place for potential repairs, insurance deductibles, or other unforeseen expenses that might arise shortly after purchasing the car. A healthy emergency fund can prevent financial stress.

Debt and Interest Rates

If financing the purchase, understand the loan terms, interest rate, and monthly payments. Compare offers from different lenders to secure the best terms. For sellers, ensure you have paid off any outstanding loans on the vehicle, as you cannot transfer a clear title if there’s a lien.

Credit Impact

For buyers, taking out a car loan will impact your credit report and score. Understand how this new debt might affect your credit utilization and overall credit health. For sellers, a smooth transaction can contribute to a positive record if any financing is involved for the buyer.

Step-by-step: How to Fill Out a Car Bill of Sale

1. Obtain a Template: Find a reliable car bill of sale template. Many state DMVs offer downloadable templates, or you can find reputable ones online.

• What “good” looks like: You have a clear, easy-to-read document with all necessary sections.
• Common mistake: Using a generic template that doesn’t meet your state’s specific requirements.
• How to avoid it: Always check your state’s DMV website for their recommended or required bill of sale format.

2. Identify the Parties: Clearly state the full legal names and current addresses of both the seller and the buyer.

• What “good” looks like: No ambiguity about who is selling and who is buying.
• Common mistake: Using nicknames or incomplete addresses.
• How to avoid it: Double-check spellings and ensure you have the full, correct addresses.

3. Detail the Vehicle: Provide comprehensive information about the car being sold. This includes:

• Make (e.g., Ford, Toyota)
• Model (e.g., F-150, Camry)
• Year of Manufacture
• Vehicle Identification Number (VIN) – this is crucial.
• Odometer reading at the time of sale.
• Body style (e.g., Sedan, SUV, Truck).
• What “good” looks like: Every piece of vehicle information is accurate and matches the vehicle’s title and registration.
• Common mistake: Typos in the VIN or odometer reading.
• How to avoid it: Carefully compare the VIN on the bill of sale to the VIN on the vehicle’s dashboard, driver’s side doorjamb, and title. Record the odometer reading directly from the dashboard.

4. State the Sale Price: Clearly write the agreed-upon purchase price in both numerical and written form (e.g., “$10,000.00 (Ten Thousand Dollars and Zero Cents)”).

• What “good” looks like: The price is unambiguous and matches what was verbally agreed upon.
• Common mistake: Omitting the written form of the price, leading to potential disputes.
• How to avoid it: Always write out the dollar amount to prevent any confusion or alteration.

5. Specify the Sale Date: Include the exact date the sale is finalized.

• What “good” looks like: The date is clear and matches the day the transaction is completed.
• Common mistake: Using the date the agreement was made, not the date of the actual exchange.
• How to avoid it: Use the date when money and keys are exchanged.

6. Disclose Condition (As-Is): Most private party sales are “as-is.” State this clearly. This means the buyer accepts the vehicle in its current condition, with no warranties from the seller.

• What “good” looks like: A clear statement indicating the sale is “as-is,” with no implied warranties.
• Common mistake: Failing to explicitly state “as-is,” which could be interpreted as offering a warranty.
• How to avoid it: Include a phrase like, “The vehicle is sold ‘as-is’ with no warranties expressed or implied.”

7. Note Any Liens or Encumbrances: If there is a loan on the vehicle, this needs to be disclosed. If the seller has paid off the loan, they should state that the title is clear.

• What “good” looks like: Full transparency about any financial claims on the vehicle.
• Common mistake: Not disclosing an existing lien, which can prevent title transfer.
• How to avoid it: If there’s a lien, ensure it’s paid off before the sale or that the process for releasing it is clearly understood and documented.

8. Include Additional Terms (Optional): If there are any other specific agreements, such as included accessories, repairs to be made before transfer, or payment arrangements, note them here.

• What “good” looks like: All agreed-upon terms are documented to prevent future misunderstandings.
• Common mistake: Relying on verbal agreements for important details.
• How to avoid it: If it’s important enough to discuss, it’s important enough to write down.

9. Signatures and Dates: Both the seller and the buyer must sign and date the bill of sale. Some states require witnesses or a notary public.

• What “good” looks like: All required parties have signed and dated the document.
• Common mistake: Forgetting to sign, date, or have witnesses/notary if required.
• How to avoid it: Check your state’s DMV requirements for signatures, witnesses, and notarization.

10. Distribute Copies: Make at least two copies of the completed and signed bill of sale. One copy is for the seller, and one is for the buyer.

• What “good” looks like: Both parties have an identical, signed copy for their records.
• Common mistake: Only one party keeps a copy.
• How to avoid it: Ensure both parties receive and acknowledge their copy.

Common Mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Incorrect or missing VIN	Difficulty in registering the vehicle, title transfer issues, potential for fraud claims.	Double-check VIN against vehicle and title; ensure it’s entered accurately.
Inaccurate odometer reading	Legal penalties, potential for title washing or misrepresentation of vehicle’s condition.	Record the exact reading from the dashboard; state the mileage as actual, not actual if it exceeds the mechanical limit of the odometer.
Omitting “as-is” clause	Seller may be liable for undisclosed problems discovered later, leading to legal disputes and financial loss.	Explicitly state “as-is” with no warranties to protect yourself from future claims.
Unclear sale price	Disputes over the amount paid, potential for one party to claim a different amount was agreed upon.	Write the price in both numbers and words to ensure clarity and prevent alterations.
Forgetting to include buyer/seller contact info	Difficulty in tracking down parties for registration or legal purposes if issues arise later.	Use full legal names and current, verifiable addresses for both buyer and seller.
Missing signatures or dates	Document may be considered invalid, delaying or preventing registration and title transfer.	Ensure all parties sign and date the document according to state requirements.
Not checking state-specific requirements	Bill of sale may not be legally sufficient for registration or title transfer in your jurisdiction.	Consult your state’s DMV website for their specific form and requirements.
Failing to disclose liens	Seller cannot transfer a clear title, buyer cannot register the vehicle, leading to significant legal trouble.	Ensure all liens are satisfied and released before the sale or clearly document the payoff process.
Not providing copies to both parties	Lack of proof of sale for one party, leading to potential disputes or inability to register the vehicle.	Always make and distribute at least two identical, signed copies.

Decision rules (simple if/then)

• If the vehicle is being sold by a dealer, then a bill of sale is usually part of the purchase agreement, and you may not need a separate one.
• If the sale is between family members, then a bill of sale is still recommended to document the transaction for tax and registration purposes.
• If the vehicle is being gifted, then a bill of sale might not be required, but a “gift affidavit” or similar document may be needed for registration.
• If the VIN on the bill of sale does not match the VIN on the car, then do not proceed with the sale until the VIN is corrected, as this indicates a significant error or potential fraud.
• If the seller has a lien on the vehicle, then ensure the lien is satisfied and a lien release is provided before or at the time of sale, because you cannot transfer a clear title otherwise.
• If the sale price is significantly below market value, then be aware that some states may assess sales tax based on the vehicle’s book value, not the sale price, to prevent tax evasion.
• If you are buying a car from out of state, then check both your state’s and the seller’s state’s DMV requirements for bill of sale and title transfer procedures.
• If the odometer reading shows “exempt” or is over the mechanical limit, then clearly state this on the bill of sale because it affects the vehicle’s disclosure requirements.
• If the bill of sale requires notarization, then ensure both parties go to a notary public to sign the document in their presence.
• If you are unsure about any part of the bill of sale, then consult your local DMV or a legal professional before signing.

FAQ

What is a car bill of sale?

A car bill of sale is a legal document that serves as proof of purchase for a vehicle. It details the transaction between the buyer and seller, including the vehicle’s information, sale price, and date.

Is a bill of sale legally required?

While not always legally mandated for every transaction, it is highly recommended and often required by state DMVs for title transfer and registration purposes.

Can I use any bill of sale form?

It’s best to use a template provided by your state’s DMV or one that complies with your state’s specific requirements. Generic forms may be missing crucial information.

What if the VIN is incorrect on the bill of sale?

An incorrect VIN is a serious error. It must be corrected before the document is finalized, as it can prevent registration and title transfer and may indicate fraud.

Do I need witnesses for a car bill of sale?

Some states require witnesses or a notary public to sign the bill of sale. Always check your local DMV regulations.

What does “as-is” mean on a bill of sale?

“As-is” means the buyer purchases the vehicle in its current condition, with no warranties or guarantees from the seller regarding its future performance or condition.

How do I handle a lien on the car?

If the seller has a loan on the car, the lien must be satisfied, and a lien release from the lender obtained before the seller can transfer a clear title to the buyer.

What should I do after filling out the bill of sale?

The buyer typically uses the bill of sale, along with the vehicle’s title, to register the car and obtain new license plates at their local DMV. The seller uses their copy as proof of sale.

What this page does NOT cover (and where to go next)

• Specific state requirements for title transfer and registration. (Next, visit your state’s Department of Motor Vehicles website.)
• Detailed information on obtaining a vehicle loan or financing options. (Next, explore options with banks, credit unions, and online lenders.)
• The process of selling a vehicle with a lien still attached. (Next, consult with your lender and your state’s DMV for specific procedures.)
• Insurance requirements for new vehicle owners. (Next, contact insurance providers to get quotes and understand coverage needs.)
• Tax implications of buying or selling a vehicle. (Next, consult a tax professional or review IRS guidelines for sales tax.)