Buying or selling a used car

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Buy, sell or lease a vehicle FAQs

It is simple to sell your vehicle. Selling a car is the same in most states. If you are not sure about your state laws, you can contact the local DMV for the requirements. In most states you simply fill out a bill of sale and sign over the title. To fill out the required information you'll need the Vehicle Identification Number (VIN), make and model, and the odometer reading. It is also usually customary to share warranty information and maintenance records with the buyer as well.

How do I sell my car if I still owe money on it?

You can sell your car even if you still have a open loan on it. You cannot sign over a title if you don't actually have the title. You have to arrange to pay off the loan so the new owner can have a clean title on the car. The first step to selling your car is to find out the payoff amount. Next you need to determine the selling price. If you cannot sell it for enough money to pay off the loan you'll need to pay the difference. If you earn a profit, you do not need to include it as a capital gain when you file taxes unless you sold it for more than the original purchase price.

When is it smart to lease a vehicle?

Most personal finance advisors will say it is never in your best interest financially to lease a vehicle. During the terms of the lease, you'll always need to make monthly payments and you'll never actually own the vehicle. It's basically like renting a car. While financially it often doesn't make sense, there are advantages to leasing a vehicle.

Advantages to leasing a vehicle:

  • Most leased vehicles include the latest technologies such as semi-autonomous driving systems, emergency braking, and more.
  • Monthly payments are often lower than loan payments.
  • Most of the maintenance and repairs are included. The vehicles often have warranties as well.
  • You only pay sales tax on the portion you pay, and not for the entire purchase price of the vehicle.
  • Usually only a small downpayment is required.
  • For business, it often allows a larger deduction than a purchase.

How do I buy a used car from a private seller?

Buying a car directly from a private seller if often much more affordable than buying from a dealer. If you are wanting to buy a car from a individual, you may be wondering how to ensure that the transaction is legal, safe and fair.

Before buying a used car from a third-party:

  • Verify the status of the title
  • Have your mechanic perform a pre-purchase inspection
  • If they have a loan on the car, verify how you can obtain the title
  • Ask for the most recently emission documents, if required in your state
  • Obtain vehicle history report using the Vehicle Identification Number (VIN)
  • Verify yourself the odometer reading and VIN
  • Ask for service records and warranty information
  • Get the transaction or bill of sale in writing