Selling a used car - questions, queries, posers

[Wes]

I'm getting ready to buy a new car and have decided to try and sell my old one on my own. This is a first for me since I usually do a trade-in. The car is paid off and I have the title. Seeing as how I've never done this on my own I have a couple of questions.

* How does the title, license, etc. get transferred over to the new owner?

* How are things like sales tax handled? I assume that the buyer handles that.

* What kind of contract do you use?

* What is my liability after the car is sold? For example, if the engine explodes 2 weeks later can I be held responsible? My guess is that a good contract should protect me.

Any other gotcha's that I need to think of?

[gmarblestone]

Ill give you my experience.
1. You sign over the title to the new owner and if they are in texas you need to fill out one more form that you can get on the txdot website(VTR-346). Make sure you have something in writing with the date, purchase price, name of owner and seller, and that it is an AS IS SALE. Sample BIll of Sale

2. Sales tax is handled by the buyer. Texas has a new law that says everyone pays a presumed tax based on the car's value (value is decided by the state, not you or buyer).

3. I just write a piece of paper the above stuff 2 copies of it, but you can download a bill of sale contract online for pretty cheap.

4. If you state it is an as is sale you have almost NO liability. The car buyer should have it inspected by a mechanic and that mechanic could have some liability if he diagnoses wrong. If the buyer chooses not to have it inspected, you are totally in the clear and basically cannot be touched. The only reason is if you KNEW something was wrong and on purpose hid it, but that is REALLY hard to prove.

[JohnT]

Nothing to do with your questions, but... You might want to run it by a Carmax dealership for an appraisal. That will give you a good idea what you should be asking outside of the KBB calculator. You don't have to sell it to Carmax, and they're always happy to provide the numbers. Just be discreet about what your plans are.

[Rson]

* How does the title, license, etc. get transferred over to the new owner? Sign the title and it is the responsibility of the buyer to register it. Keep bill of sale and copy of tranactional documents incase they rob a bank and it is your car.

* How are things like sales tax handled? I assume that the buyer handles that.

* What kind of contract do you use?

* What is my liability after the car is sold? For example, if the engine explodes 2 weeks later can I be held responsible? My guess is that a good contract should protect me. Used items are sold as is and it is the responsibility on the buyer to investigate prior to purchasing. It helps to put AS-is on the bill of same.

Here is the link for DMV title transfers:
http://www.dmv.org/tx-texas/title-transfers.php


Things to look for:
1: never take check, paypal, Money Order or anything other than cash or cashiers check from a reputable bank (pending deposit)
2: Don't trust anyone (except me)
3: Believe it or not some people will buy sight unseen and send you the money....still see rule 1
4: Ebay works wonders for selling cars (I have sold 2) be exact and use lots of pictures. see rule 1 (not even paypal)

[Rson]

also another aspect to look at.....you don't pay tax on the amount that you trade in for.

For example. I am buying a 10000$ car and my trade in is 5000$. This gives me a taxable amount of $5000 for the new car. So if the dealer tax rate was 5% I would have to make 250$ over the offered trade in value to make it worth my while to sell vs. trade in.

Math: Trade in value + tax benefit= total amount earned for the car

[Wes]

Thanks for the great advice everyone!

Originally Posted by JohnT

Nothing to do with your questions, but... You might want to run it by a Carmax dealership for an appraisal. That will give you a good idea what you should be asking outside of the KBB calculator. You don't have to sell it to Carmax, and they're always happy to provide the numbers. Just be discreet about what your plans are.

I plan on taking it by Carmax at some point, but they will only offer trade-in value which is a lot less than what you get when you sell it privately. If I don't sell it privately then I'll see what Carmax says and compare it to what I'm offered on trade-in at the dealership.

[ggeen]

Just for some clarifications.
* Texas state tax rate is 6.5%
* There are no city or county taxes added to automobile sales
* The state determines the reasonable value of the automobile for tax purposes. They still ask the buyer how much was paid.
* You sign over the title and there should be an included mileage verification form attached to the title. Fill in and sign both. Really old cars, 20+ for sure, do not require the mileage verification form. -- I recently sold a 20 y/o El Camino.
* The buyer is responsible for paying taxes and registering the vehicle.
* The buyer has ten days to register the vehicle.

+ Grant's information is correct, follow it.
+ Rich has some good advice
+ To expand on John's recommendation, Carmax will give you wholesale value for your car.
+ There are car wholesaler's out there that will buy your car from you and are usually $1,000 higher than trade-in values. I've used one in the past who consistently gave me a better price.
+ Rich is also correct about the trade-in value lowering your tax burden at purchase.

[jerrykr]

If you can do it, go to the Motor Vehicle office with the buyer to make sure that they actually transfer the title. If they don't transfer the title, the state still shows the car as owned by you for such things as parking tickets, camera based toll road charges, camera red light running, bank robberies, (you get the picture) where the driver was not identified. It's amazing how easy it is to get a warrant issued for your arrest now days, when formerly minor infractions are not paid/taken care of by the person who was driving/owning the car. Having the bill of sale signed by the buyer is a good thing, but when you get stopped at 2 am, identified, and hauled in to jail on a warrant, you will have a lot of trouble getting things straight. It can happen.

BTW: I always sell my cars myself, but it is getting more and more critical to make sure that everything about the sale is completed on the buyer's side.

[gmarblestone]

You, the seller, needs to mail in the VTR-346 form which is a Texas Motor Vehicle Transfer Notification. It will help in situations below. I DOUBT anyone is going to go with you to the DMV, but if you can that would be great. If you have documentation of the sale and you turn in this form, you should be good, but weird stuff does happen 1 out of 1million times

G

Originally Posted by jerrykr

If you can do it, go to the Motor Vehicle office with the buyer to make sure that they actually transfer the title. If they don't transfer the title, the state still shows the car as owned by you for such things as parking tickets, camera based toll road charges, camera red light running, bank robberies, (you get the picture) where the driver was not identified. It's amazing how easy it is to get a warrant issued for your arrest now days, when formerly minor infractions are not paid/taken care of by the person who was driving/owning the car. Having the bill of sale signed by the buyer is a good thing, but when you get stopped at 2 am, identified, and hauled in to jail on a warrant, you will have a lot of trouble getting things straight. It can happen.

BTW: I always sell my cars myself, but it is getting more and more critical to make sure that everything about the sale is completed on the buyer's side.

[Cope]

Originally Posted by Rson

also another aspect to look at.....you don't pay tax on the amount that you trade in for.

For example. I am buying a 10000$ car and my trade in is 5000$. This gives me a taxable amount of $5000 for the new car. So if the dealer tax rate was 5% I would have to make 250$ over the offered trade in value to make it worth my while to sell vs. trade in.

Math: Trade in value + tax benefit= total amount earned for the car

True, but I suspect Wes can get substantially more for the car than dealer trade in value.

[gmarblestone]

True, but I suspect Wes can get substantially more for the car than dealer trade in value.

Yeah, but compared to carmax it might be a good idea to keep in the back of your mind.

G

[110240]

caveat emptor

[jerrykr]

thanks for the info on the VTR-346 form. It must not have existed the last time I sold a car myself. I will remember that.

I know in the past I have received bills for parking tickets against a car I sold, but at that time you could just respond with a letter "I sold the car". It's not the same anymore, and cities then were not so quick to issue a warrant over the small stuff. But, I guess when they realized they could convert a $5 fine to $300 with a warrant, it became a no brainer for them.

There's lots more to this, but I don't feel like going into it. Pay your tickets and fines on time, make sure you are only listed as owner of the cars you actually own and drive.

my .02 (and it cost a lot more than that to learn my .02).

[ggeen]

Originally Posted by jerrykr

There's lots more to this, but I don't feel like going into it. Pay your tickets and fines on time, make sure you are only listed as owner of the cars you actually own and drive.

my .02 (and it cost a lot more than that to learn my .02).

I traded in a car shortly after moving to Dallas. A few month's later the Sheriff's department showed up at my parent's house in west Texas with a warrant. After informing the officer where I lived my mother asked what this was about. He replied and my mother said...Oh, he sold that car three months ago. End of story. Apparently the used car lot never took ownership of the car and never transfered the title to the new owner upon sale of the vehicle. The new owner then used it in a hit-and-run. Not sure the h-and-r was intentional.

My point, just because you trade it in does not mean that all the legalities are done. You are better off selling it on your own. The increase in revenue dollars should offset the increase in sales tax for not having a trade-in.

-G

[sbp]

Read this if you have time

http://www.edmunds.com/advice/buying...2/page001.html