Selling your car directly to an individual buyer can bring you a higher price than if you trade it in at a car dealer. Assembling the necessary paperwork beforehand may make your car easier to sell. The transfer of ownership also will go more smoothly when you find a buyer. Lenders require certain documents from both the buyer and seller when making a car loan.
Bill of Sale
A bill of sale is an agreement that makes the sale contract between you and the buyer legal. The document must include your name and address, the buyer's name and address and the selling price. In many states, the law requires both the buyer and seller to sign the bill of sale. Other information listed on a bill of sale includes a description of the vehicle, the vehicle identification number (VIN) and odometer reading at the time of sale. The buyer needs a bill of sale to show the lender as well as to register and title the vehicle.
Vehicle History Report
A vehicle history report from a national database such as Carfax , AutoCheck or the National Motor Vehicle Title and Information System shows that your vehicle has a clean history, which can improve your chances of selling it. Vehicle history reports include information about past owners, previous odometer readings, service records and accidents involving the vehicle. The vehicle's maintenance record also gives a potential buyer more information about the car's history. A mechanical inspection report could be a worthwhile investment on your part as well. Showing that the vehicle was mechanically inspected before the purchase could help the buyer's chances of getting an auto loan. Ask the mechanic to include the make, model and VIN of the vehicle on the report along with a cost estimate for any necessary repairs.
Vehicle Title
As the seller, you cannot transfer ownership of the vehicle until there is no lien holder listed on the title. In most states, you are not allowed to privately sell a vehicle until you have clear title. This means you have to repay your car loan in full before the lender will release the lien on the vehicle. A lien release is proof that a loan you have on the vehicle has been satisfied. Once you pay off the auto loan, a lender usually releases the title marked paid. However, some states require you to go to the department of motor vehicles to get your title. These states generally require you to pay a fee before releasing the title.
Other Documentation
Providing an estimated retail value for your vehicle based on Kelley Blue Book or National Automobile Dealers Association and trade magazines can be helpful to a buyer's lender. Other documentation that is not always required but which can be useful includes transferable manufacturer's warranty documents or service contracts that haven't yet expired. Writing a formal purchase agreement can also be helpful to a buyer applying for financing. A written contract holds more ground, as the seller must honor any promises stated in the contract. If you sell the vehicle "as is," clearly state that in the contract. Even though implied warranties don't normally apply to private individuals selling a vehicle, stating it in the sale contract gives you additional protection by removing any implied warranties.
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