An owner may only sell a vehicle if it has a clear title, which means that there are no liens on the title for car loans or other legal action against the owner. Specify the status of the title in the addendum. In this case, the bank can usually mail the title to the buyer upon receiving the correct payoff amount. In most cases where a bank holds the vehicle title, the buyer writes one check directly to the bank for the payoff amount and another check to the seller for the remaining amount between the payoff and the sales price.
This will provide exactly the amount of money that you still owe on the car, and which your buyer must pay to purchase the car. Get a payoff letter from the financing company if you are still making payments on the car.You can include “boilerplate” language to indicate the status of the title if you own the car, such as the following: “The Seller warrants that 1) the Seller is the legal owner of the car 2) the car is free from all liens and encumbrances 3) the Seller has full right and authority to sell and transfer the car and 4) the Seller will warrant and defend the title of the car against any and all claims and demands of all persons.” X Research source.In some cases, a seller can sell a car when the bank still holds the title (i.e., the seller still owes money on the car). You can state in the contract that your purchase price includes this sales tax (“inclusive of all sales taxes”), or decide that sales tax is additional to the price (“exclusive of all sales taxes”). In some states, you must charge sales tax. State whether the purchase price is inclusive of sales taxes.After all payments are complete, you can send the title to the new owner via certified mail.
If you do agree to a payment plan, be sure that you hold the car’s title until the payments have all been made in full.A common fraud scheme is for someone to give an initial payment, then take the vehicle and disappear. Only agree to a payment plan if you know the person to whom you are selling the car. For example, the buyer might pay $250/month for sixteen months. Though not recommended, you can also stipulate an agreed to payment plan.
Buyer agrees to pay to Seller the purchase price of $500 to be paid in cash.” X Research source For example, “The date of sale is March 14, 2011.
Describe the method of payment for the purchase-cash, personal check, cashier’s check, money order, etc. State the date of the sale and the purchase price.
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