If you are thinking and feeling generous, you can give your vehicle away for free. This occurs more often than you might think, but often for circumstances such as:
- A family member just got their driver’s license
- You purchased a new vehicle and still have your old one to deal with
- You can no longer drive for medical reasons
- You know a family or individual in dire need of a car
To perform this process official, there are some steps that should be made to ensure the car is properly transferred to the new owner. The gifting process may differ slightly depending on the state you stay in, however, the general steps are listed below.
Part 1 of 2: Complete an agreement with the recipient of the gifted car
Step 1: Negotiating the terms of the gift. Gifting a car for no financial gain doesn’t exclude you from discussing the terms of the car transfer.
The responsibility for potential and ongoing expenses, such as insurance fees, fuel expenses, repair fees, and maintenance costs, should be clearly stated with the recipient so both parties get on the same page.
Know who will pay fees and taxes linked with the title transfer process.
Visit the nearest DMV or check the DMV website to see what costs will come with your title transfer.
For example, in California, the title transfer fee is $15 plus taxes through the DMV. The fees and policies differ from state to state.
- Note: If the recipient has to pay sales and use tax on the gift, calculate the tax amount based on the NADA Official Used vehicle Guide price, an accepted market price guide, for the car.
Image source:DMV Califonia
Step 2: Write a sales agreement or bill of sale for the gift. It may appear unnecessary at the time, but the seller may still maintain liability for the vehicle if there isn’t a contract in place for the gifted car.
A contract or bill of sale will likely be needed by the DMV at the time of title transfer anyway.
Have both the current owner and the recipient fill out the necessary sections of the bill of sale or agreement.
Part 2 of 2: Complete the transfer of title area of your title certificate
Step 1: Confirm that there are no liens outstanding on your vehicle. You won’t be able to transfer your title with an outstanding lien on your vehicle.
A lien on your vehicle means that there is a third party that has a legal and financial interest in your car because of a debt owed.
If there exist a lienholder listed on your title, contact them to make arrangements to remove the lien.
If the funds are to be paid in full, it may be as simple as completing a discharge of loan through the DMV. You can visit the DMV lien removal page for additional information.
You may have to finance your car loan in another fashion to remove the lien from the title. This can be performed by closing your current loan through financial help from an outside lender such as an Escrow.
- When the lien has been discharged, you can go ahead with the title transfer.
Step 2: Fill out the transfer of title section. You will be required to fill out the transfer of title section entirely on the original car title.
- Ensure to print the current mileage on the title transfer section.
Write “GIFT” in the sale amount field on the title.
Step 2: File the title transfer paperwork. The easiest and most straightforward way to transfer your title to the vehicle’s recipient is for both parties to go to the DMV branch and complete the paperwork.
- A clerk at the office will make sure all the paperwork is filled out correctly and completely so there are no delays or issues.
- You may require to fill out a Statement of Facts or another document saying the vehicle is being transferred as a gift so the recipient can be exempted from paying taxes on the transfer.
- Part 2 of 2: Make Payment of the title transfer fee and applicable state taxes
Step 1: Find the applicable fee amounts. If you are at the DMV office, they will let you know exactly how much will need to be paid.
- If the recipient is shown as exempt from paying the sales and use tax online, they will likely still have to pay the title transfer fee.
Step 2: Pay fees and taxes. Pay the DMV fees for the title transfer and sales tax if it is applicable.
- The moment the fees are paid, the transfer is done and the car has been gifted to the new owner.
Whether you are gifting your car to a family or friend, there are certain processes that you need to make this process official. By following the guide above, the gift recipient can then enjoy their new car with the title successfully transferred under their name.