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Why You Need a Used Car Bill of Sale
Some drivers may be wondering what the used car bill of sale is and why they need it when they are buying a car. Here are some facts about why you need a bill of sale to process the sale of a vehicle.
Dealer Sale
A dealer will routinely print out a bill of sale as part of the paperwork on a vehicle when they sell it to a customer. That’s because dealers know that this documentation will be required in most states in order to formally sign over the title at the DMV or to register the vehicle.
Private Party Sales
In private party sales, sellers often go along with buyers to a notary public. Both of them sign the title before the notary. This can be a lengthy, time-intensive process, and it’s inconvenient for most buyers. But, since the private party seller doesn’t often have an official invoice or bill of sale, they have to follow that protocol. After the title is signed over, the seller and buyer also have to record a formal sale price.
Auto Sales Tax
The main reason for a bill of sale, apart from showing the buyer as the owner of the vehicle, is to provide a formal amount for the sale. The state that a buyer drives in then taxes that amount with a straight percentage as an auto sales tax. That’s where the bill of sale is especially useful. This documentation requirement is part of a greater plan by the states to collect appropriate auto sales taxes from each vehicle sale. Often, in private party deals, the seller and the buyer may agree on a lower price to record on the bill of sale or other documents. This is why some states have enacted laws tying auto sale prices to a blue book value or other valuation.
Think about this when buying a vehicle and make sure you have a bill of sale handy to process that car or truck into your name at the DMV.
