What Is A Car Bill of Sale and Do I Need It?

A bill of sale is the linchpin of a private-party vehicle transaction. It serves as a written record that legally documents the transfer of ownership from the seller to the buyer.
While not required by every state’s Department of Motor Vehicles (DMV), this legal document ensures that both parties are on the same page, keeping misunderstandings at bay and providing legal protection for buyer and seller alike in the unlikely event of a dispute.

See why you should use a bill of sale for your next used car sales experience and how PrivateAuto makes the bill of sale process easy.

What is a Bill of Sale for Car Transactions?

A bill of sale is a legal document that records the transfer of ownership of an asset from one person to another. The asset could be a vehicle, boat, piece of equipment, or any other type of personal property.

A bill of sale provides proof of ownership and can be used to register the asset with the new owner with the appropriate authorities. In some cases, a bill of sale may also be required in order to obtain insurance for the new owner.

The importance of a bill of sale cannot be overstated, as it performs several crucial functions in a private-party vehicle transaction.

1. It establishes the date of the sale, which is essential for tax and registration purposes.
2. It outlines the vehicle's specifics, such as make, model, year, and vehicle identification number (VIN)
3. It includes essential information about the buyer and the seller, such as names, addresses, and contact details. This information comes in handy in the event of a dispute or if the vehicle's history needs to be traced.

Basically, the bill of sale serves as a safety net for both parties.

What Info Needs to Be On a Motor Vehicle Bill of Sale?

Each state might have different requirements for what must be included in a bill of sale, but all include such pertinent info as the names and addresses of the buyer and seller, vehicle info, and purchase price.

Here’s a more exhaustive list of what most states’ bills of sale include:

Seller's info:
Full name
Address
Contact information (phone number and/or email address)
Buyer's info:
Full name
Address
Contact information (phone number and/or email address)
Vehicle info:
Make (manufacturer)
Model
Year
Body type
Vehicle Identification Number (VIN)
Odometer reading (mileage)
Color
Vehicle description, including condition
Transaction details:
Purchase price (in words and numbers)
Date of sale (month, day, and year)
Payment method (cash, check, money order, or electronic transfer)
Additional terms and conditions (if any):
An acknowledgment that the new owner purchases the vehicle with or without a warranty, as the case may be
Disclosure of known defects or issues with the vehicle
Any agreed-upon repairs or maintenance to be performed before or after the sale
Terms of a return policy, if any
Any other specific terms agreed upon by both parties
Signatures:
Both the buyer and the seller should sign and print their names
The date of signing
Witness signatures, if required by your state, or if desired for extra validation
Notarization (if required or desired—some states require the bill of sale to be notarized, while others don’t)

Carefully review key information, like the VIN, before signing to be sure there are no errors in the document. Serious errors could void the bill of sale or stall the title transfer process until they’re corrected.

Don’t worry: when you buy or sell a car through PrivateAuto, we include your state’s official bill of sale as part of our in-app process. Both buyer and seller will e-sign the document at the appropriate stage in the transaction, after which the buyer can transfer payment and the seller can sign over the title.

Purpose of a Vehicle Bill of Sale

A bill of sale records the transfer of ownership from the seller to the buyer. It establishes transparency and trust between both parties and safeguards their respective interests. Let's delve deeper into the purpose of a bill of sale from both the buyer's and seller's perspectives.

The Bill of Sale for a Car Buyer

When buying a used car from a private party, a bill of sale protects you in the following ways:

1. Proof of ownership: a bill of sale serves as evidence that you have bought the car fair and square from the seller, thus confirming the transfer of ownership.
2. Scam protection. If the seller is planning on receiving your payment and then refusing to sign over the title to you, the bill of sale proves that they are required to complete the transaction—or give your money back.
3. Legal compliance: in many states, a bill of sale is required for title transfer and vehicle registration, ensuring that the buyer complies with local laws and regulations.
4. Insurance: the bill of sale is often necessary for obtaining insurance coverage for the newly acquired vehicle, as it provides proof of purchase and ownership.
5. Transparency: the bill of sale outlines the details of the transaction, including the vehicle's specifics and the agreed-upon purchase price, ensuring that both parties understand the terms and conditions of the sale.
6. Dispute resolution: In the event of any discrepancies or misunderstandings, the bill of sale serves as a reference point, helping resolve disputes more efficiently.

As a buyer, you definitely want a bill of sale, signed by the seller, to secure your transaction. And we give you one when you buy a car through PrivateAuto.

The Bill of Sale for a Car Seller

When selling your car to a private individual, a bill of sale acts as a safeguard in case the buyer doesn’t transfer the title out of your name.

1. Release of liability: a bill of sale helps the seller prove that they have transferred the ownership of the vehicle, thereby releasing them from any future liability related to the vehicle's use, such as traffic violations or accidents.
2. Protection against fraud: the bill of sale helps protect the seller from potential fraud by establishing the date of sale and the identity of the buyer, ensuring that any future issues are directed towards the new owner.
3. Tax purposes: the bill of sale documents the transaction's details, including the sale price, which may be required for tax reporting and record-keeping purposes.
4. Legal compliance: similar to the buyer, the seller is also required to comply with local laws and regulations, and a bill of sale helps in fulfilling this obligation.
5. Peace of mind: the bill of sale offers the seller peace of mind, knowing that the transaction is documented and legitimate, reducing the risk of potential issues down the road.

Similar to the receipt you receive from every other transaction, a bill of sale provides evidence that you signed a contract with the buyer. The certificate of title is an official legal document, but the buyer takes it with them, meaning that you won’t be able to use the title to prove that you sold your car.

A bill of sale shows that you are no longer the owner and are not responsible for any collisions, crimes, or parking tickets after the date of sale. Be sure you also sign the title and the odometer disclosure statement.

Auto Loan and Bill of Sale Combination

An auto loan/bill of sale combination usually comes into play when the buyer is financing a vehicle purchase through a lending institution. In such cases, the bill of sale is supplemented with information about the auto loan, linking the vehicle purchase and the financing agreement.

This combined document may include:

Loan amount: the total amount financed by the lender.
Annual percentage rate (APR): the annual interest rate applied to the loan.
Loan term: the duration of the loan, usually in months or years.
Monthly payment: the fixed amount the buyer must pay the lender each month.
Lienholder details: the name and contact information of the lending institution that holds the lien on the vehicle until the loan is fully repaid.

The purpose of an auto loan/bill of sale combination is to clearly outline the terms of both the vehicle purchase and the financing agreement. This ensures transparency and allows the buyer, seller, and lender to be on the same page regarding the transaction.

An auto loan/bill of sale combo is different from an auto loan agreement, which is a separate contract between the buyer and the lender that details the terms and conditions of the vehicle financing.

A bill of sale can also be used in an auto loan agreement. For example, if you're buying a car using financing, the complete purchase agreement can be framed as a bill of sale, although technically the transfer of title might not happen until all payments required under the loan are made.

When you buy or sell a car, the state you live in may regulate loan/bill of sale combinations because some sellers or lenders may abuse them.

For example, some sellers may use auto loan/bill of sale combinations to sell cars that have a salvage title or that have mechanical defects. Some lenders may use loan/bill of sale combinations for a loan refinance without the borrower's knowledge or consent. If you're considering entering into a loan/bill of sale agreement, it's important to research your state's laws and regulations surrounding this type of contract.

It's a good idea to consult with an attorney and get all relevant legal information before entering into any loan/bill of sale agreement, just to be sure that your rights are protected.

By doing your due diligence upfront, you can help protect your rights in the event that something goes wrong. For instance, if you're considering entering into a quitclaim deed, you'll want to make sure that you understand all the implications first. Otherwise, you could end up losing your car or becoming liable for someone else's debt.
Bill of Sale

How to Write a Bill of Sale

There are many different ways to create a bill of sale, but you shouldn’t try to write your own. Each state already has its own official bill of sale, which you can usually download from your state’s website or pick up at DMV offices.

However, PrivateAuto provides an official bill of sale form for your state when you buy or sell a car through our handy app.

Bill of Sale Types

There are several types of bills of sale, ranging from printed to handwritten to electronic—to types for different scenarios.

Printed Basic Bill of Sale

Back in the day, a bill of sale was a printed document. Some people still do it this way. We’ve made it so much easier: both parties electronically sign in our mobile app.

Even the most basic printed bill of sale should include the following info:

The names and addresses of both the buyer and seller
The description of the asset being sold
The date of sale and the purchase price should also be included

Handwritten Bill of Sale

A handwritten bill of sale is—you guessed it—a bill of sale written by hand instead of printed or generated electronically. The buyer, seller, and possibly a notary public should all sign the handwritten document, which should contain all of the same pertinent info as any other bill of sale.

A handwritten bill of sale is a valid document as long as it includes all of the required information and signatures.

Electronic Bill of Sale

An electronic bill of sale, also known as an "e-bill of sale," is a legal document that allows an individual to transfer ownership of a vehicle to another person. In order to create an e-bill of sale, both the buyer and the seller must agree to the terms of the sale and sign the document electronically. Once the bill of sale has been signed, it is considered binding and cannot be altered or revoked.

When you transact via PrivateAuto, we include an easy e-bill of sale as part of every transaction.

Motor Vehicle Bill of Sale

A motor vehicle bill of sale is designed specifically for the sale of a car, truck, or motorcycle. This designation encompasses e-bills, handwritten bills, and printed bills of sale.

Conditional Bill of Sale

A conditional bill of sale is an “if-then” agreement. It outlines the transfer of ownership of an asset (such as a vehicle) with a catch. In this case, the catch is that the transfer of ownership is only possible if certain conditions or obligations are met. So long as these conditions aren't met, the deal isn't finished.

Often, a conditional bill of sale is used when a buyer is purchasing a vehicle through a financing arrangement. In such cases, the condition to be met is usually the full repayment of the loan. Until the buyer pays off the loan in its entirety, the lender retains a security interest in the vehicle, effectively holding the keys to the kingdom, so to speak.

The conditional bill of sale usually has information about the vehicle, the people involved, the purchase price, and any conditions that must be met before ownership can be transferred. Once all the conditions are met, the bill of sale becomes unconditional (i.e., a regular ol’ bill of sale).

In essence, a conditional bill of sale acts as a safeguard for the lender or seller in a financed transaction. It's like having a safety net, ensuring that the buyer holds up their end of the bargain and meets their financial obligations. It provides the lender or seller with legal recourse, such as repossessing the vehicle, if the buyer fails to fulfill the stipulated conditions.

“As-Is” Bill of Sale

An as-is bill of sale stipulates that a vehicle is being sold in its current condition, with the buyer accepting all existing faults or defects. This type of bill of sale implies that the seller offers no warranty or guarantee and that the buyer bears the responsibility for any repairs or issues post-purchase.

Most private-party vehicle transactions involve an as-is bill of sale, since most sellers sell their car as is, with no guarantees of future performance or condition.

Who Needs to Sign Bills of Sale?

Both the buyer and seller must sign a bill of sale for it to be valid. Just like signing your car title, both parties need to sign and date the document to show that the agreement is mutual. Some states require the bill of sale to be witnessed by a notary public, while others only require the signatures of the buyer and seller.

Who Keeps the Bill of Sale?

A buyer and seller should each keep a copy of the bill of sale. The bill of sale protects buyers and sellers equally.

If you’re using a printed or handwritten bill of sale, generate two copies so you each can have one. Then each of you sign both copies.

When doing the deal through PrivateAuto, we store electronic copies of the bill of sale in our app. The buyer and the seller can each forever access their official copy in their respective PrivateAuto account.
Signing bill of sale

Is a Bill Of Sale Legally Binding?

In a nutshell, a bill of sale is indeed legally binding. It outlines the terms and conditions of the agreement, ensuring both parties have a written record of what they agreed to. In the unfortunate and rare event that you end up in court, the bill of sale will help you hold the other party accountable.

Where Can I Find a Good Bill of Sale Template?

Transact through PrivateAuto and forget about searching for the perfect bill of sale template. We provide an official bill of sale for your state and we make it so easy for both parties to e-sign it in our mobile app.

Plus, we provide a host of other benefits, from instantaneous fee-free transactions to secure communications. We’re the only platform that gives you end-to-end convenience and safety to get the deal done.

List your vehicle today and see just how easy it can be. Or, if you’re in the market, browse used cars for sale by owner.

Buy or Sell Used Cars With PrivateAuto

Whether you are trying to find a used vehicle for sale near you or you are trying to sell your vehicle, PrivateAuto makes it happen.

Our integrated banking gateway, PrivateAuto Pay, is truly revolutionary. It allows you to send or receive unlimited funds instantly and for free.
PrivateAuto

Bill of Sale FAQ


Is a handwritten bill of sale OK?

In most states, a handwritten bill of sale can serve as a legally-binding agreement, provided it has all of the necessary info about the vehicle, the buyer and seller, and the terms of the transaction.

Still, handwritten bills of sale are terribly inconvenient. Transact with PrivateAuto and enjoy the convenience of our electronic bill of sale.

Do I need a bill of sale if I have the title?


What paperwork do I need to sell my car privately in California?


Does a car bill of sale need to be notarized in Utah?


Do you need a bill of sale to register a car?


Is a bill of sale required in Florida?


Can you get a title with a bill of sale in Arkansas?


Can you get a title with a bill of sale in Mississippi?


Do I need a bill of sale to transfer a title in Idaho?


Do commercial vehicles require a separate bill of sale?


When selling my car, do I need to remove the license plate?


Are there specific bill of sale requirements for car transactions in North Dakota?


How does a bill of sale affect vessel registrations?


What is a driver's guide?


Can a freedom of information request help me obtain a copy of a bill of sale for a car transaction?


Is the buyer's signature mandatory on a bill of sale during a car transaction?


Are there unique bill of sale requirements for car transactions in Rhode Island?


Who pays license fees in a private car transaction?


Are there specific bill of sale requirements for car transactions in West Virginia?


Do I need an ID card to complete a bill of sale for a car transaction?


How are registration fees paid in a private party car transaction?


Are registration applications necessary?


How does the bill of sale process differ for car transactions involving out-of-state buyers?


Do I need to provide proof of insurance during a car transaction?


Does South Dakota require a bill of sale?