The car is up for sale, and the phone is ringing, but so far the guy who seems to want it most lives in a different state. Is selling a car to an out-of-state buyer a problem? The short answer is “No,” but you should know some things that will help protect you and the investment you’re about to send down the road.
Test Drive and Inspection
Assuming you and the prospective buyer are both in the same ballpark about price, a buyer may want to take the car for a test drive when they come to pick up the car. You should probably ride with them, just to make sure they don’t hit the open road without completing the transaction.
The prospective buyer should also want to get the car inspected at a shop before buying it. Appointments and arrangements for this kind of thing should be made in advance. If the shopper wants to have a vehicle delivered, rather than coming to pick it up themselves, they can arrange a remote inspection, where a mechanic will come look at the car on their behalf.
If all goes well, it’s time to talk money. Specifically, how do you get paid?
Will you take a personal check? Umm, no. Sorry. Unless you know the person well, know where they live, know where they work, and know their family, you should not take a personal check for a large transaction like a used car sale. There are too many ways for this to head south in a hurry: Maybe the check is no good, maybe the buyer stops payment after writing it, maybe the check is stolen. In short, no, no, no. Just say no.
Cash is always best. Don’t be afraid to ask for cash. If your negotiation ended at an odd amount, you are not expected to make change. Assuming banks are open, the buyer can go to a bank to withdraw cash or get the next best thing: a cashier’s check made out to you. A money order made out to you will also work. Alternatively, you and the buyer can consider using a service like Escrow.com to handle the financial dealings.
Small businesses holding a merchant account with a credit-card company or a mobile payment company like Square can technically accept credit cards. But because these sellers will have to pay a percentage of the transaction to the credit-card company or Square, the more expensive the car you’re selling, the less appealing this option becomes.
Auto sales are regulated by individual states, and although rules about transactions are similar, each state has its own peculiarities. Do your homework to see what you as the seller are responsible for in terms of registration, title, a bill of sale, insurance, and taxes before your ex-ride drives down the highway.
To sell a vehicle anywhere and to anybody, you need to have title to the vehicle, meaning you own it free and clear of any liens. If you financed your car, whoever is servicing the loan holds the title until it’s fully paid. Once the car is paid off, the finance company should send you the title to the car with your name as the owner and no liens attached—it should say that near the bottom of the form. Things get a bit more complicated if you still owe money on your loan, but it’s still possible to sell the car.
When you sell the vehicle, there’s a box—usually on the back of the title—that you as the seller fill out and sign. It will list the date, sales amount, and odometer reading. Read carefully to see if there are any other instructions about selling the car out of state, and follow them.
In addition to the title, you may have to provide a Bill of Sale. These are usually not mandatory, but it doesn’t hurt to have a document with all the information on one page, and you can create your own bill of sale. Write a title up at the top like, um… “Bill of Sale.” List the make, model, year, and vehicle identification number (VIN) of the car you're selling. The VIN will be on the title, but you can also find it on your insurance information and inside the driver’s side door. List the sales price and mileage on the odometer. Make a sub heading for “Seller,” and fill in your full name and address. Make a sub heading for “Buyer,” and have the buyer put in their name and address. Put a date on the bottom, add your signature, have the buyer do the same, and you’re done.
Once the car is sold, the buyer will need to register the vehicle in their state—which will issue a new title to the new owner. You might also be responsible for notifying the state that you no longer own the vehicle. Check with your local DMV to see what (if anything) you need to do. Some states require inspections before a vehicle can be registered, but this is the buyer’s responsibility, not yours.
In order for the buyer to drive the car home, it needs to have tags. Since the car they are buying hasn’t been registered or titled in their state, they will need to get temporary tags and a temporary registration at their DMV. Some states also issue “transfer tags” that would allow the buyer to pick up transfer tags in the state they are buying the car in and drive it home. If the state requires the title to be transferred before issuing any kind of tags and registration, the buyer will need to complete the sale with you, bring all the paperwork to the DMV, re-title the vehicle, acquire the new registration and plates, and then go back to get the car with the completed paperwork.
Your license plates are attached to your name and registration, so they need to get removed when you sell the vehicle—especially if it’s leaving the state. Your state may want your old tags back, or you can nail them to the garage wall as an homage to your old car. Check with the DMV about what do with plates for a vehicle you no longer own.
Don’t forget to cancel the insurance on the car you just sold. If you’re buying a new car, you can probably just give the insurance company its VIN, make, model, and year, and they will adjust your policy.
Selling a car to an out-of-state buyer is not much different than selling to somebody down the street. With a little preparation and a trip to the DMV, you can sell your old car and get on your way to a new one.