Guide To Sell your Car to a Friend: What You Need to Know

Selling a car to a friend can seem like a simple process, but there are important steps you need to take to ensure everything goes smoothly. From transferring ownership to handling paperwork, each step needs careful attention. 

In this article, we will guide you through the important things you need to know to make sure the sale is legal and stressfree. Whether it’s setting a fair price or getting the right documents in order, we’ve got you covered. Follow these tips to make the car selling process simple and easy for both you and your friend.

Legal Considerations

When selling a car to a friend, it’s important to understand the legal steps to avoid any future problems. Here are the key legal considerations:

Transfer of Ownership

• Importance of Transferring Ownership: 

This protects you from any future liabilities or fines after the sale. It shows that you officially transfer ownership from you to your friend.

• How to Complete the Transfer of Ownership Form: 

Both the buyer and seller must fill out a transfer of ownership form, that is mostly available on your state’s road authority website for example – In NSW, sellers need to submit notice of disposal when selling or disposing of a car within 14 days after sale, this form is available on Service NSW website. The paperwork must be signed by both parties and submitted to the relevant authority, along with any applicable fees. 

Roadworthy Certificate

• What is a Roadworthy Certificate? 

A roadworthy certificate verifies that the vehicle is safe to drive on the road. It checks important basic safety features like brakes, tires, and lights.

• Why it’s Necessary and How to Obtain One: 

In most states, a roadworthy certificate is required before selling a car. You can obtain one from a licensed vehicle inspector. The car must pass the inspection to get the certificate.

Preparing the Car

Before selling your car to your friend, make sure it’s well-prepared. This will help ensure a smooth transaction and a positive impression. Here are the important steps you should take:

Clean and Repair

• Importance of Clean Car: A clean car looks more appealing and shows that you’ve taken good care of it. It can also help you get a better price. 
• Basic Repairs to Consider: Fix minor issues like dents, scratches, or broken lights. Make sure the tires are in good condition and all fluids (oil, coolant) are filled up.

Gathering Documentation

List of Necessary Documents:

• Registration papers
• Service history
• Roadworthy certificate
• Owner’s manual
• Any warranty documents

Setting a Fair Price

Setting a fair price for your car is important when selling it to a friend. It ensures both parties feel good about the deal. Here’s how you can determine a fair price:

• Research Market Value

To determine the value of your car, use online tools such as RedBook and CarsGuide. These websites allow you to enter your car’s make, model, year, and condition to get an estimated market value.

• Consider Friend’s Budget

Talk openly with your friend about their budget. Being honest about how much they can spend allows you to set a pricing that works for both parties. It’s important to ensure that your friend is happy with the price you settle on.

If your vehicle is damaged or old and your friend refuses to buy it, then don’t worry you have other options available as well such as cash for cars Sydney service or car removal services. They buy such vehicles and provide good reasonable prices. 

Financial Arrangements

When selling a car to a friend, it’s important to handle the financial side properly to avoid any misunderstandings or problems.

• Payment Method

Use safe payment methods like a bank transfer or a cashier’s check. These methods ensure that the payment is secure and can be easily tracked.

• Clear Financial Agreements

Create a simple written agreement that outlines the payment terms. Make sure both you and your friend understand and agree to the payment terms. This helps prevent any confusion or disputes later on.

Handling Paperwork

Handling the paperwork when selling a car to a friend is crucial to ensure a legal and smooth transaction. Here are the key documents and steps you need to complete:

1. Bill of Sale

The bill of sale should include the names and addresses of both the buyer and the seller, the car’s make, model, year, and Vehicle Identification Number (VIN), the sale price, and the date of sale. Both parties should sign and keep a copy for their records.

1. Notice of Disposal

You need to notify the relevant authorities that you have sold the car. For example, in Victoria, you can notify VicRoads online or by filling out a form. In New South Wales, you notify Transport for NSW. This helps to update their records and ensures you are no longer responsible for the car.

1. Registration Transfer

To transfer the car registration, fill out the transfer of ownership form, which is available from your state’s transport authority. Both you and your friend need to sign this form. Submit it along with the roadworthy certificate and any applicable fees. The buyer then needs to register the car in their name. 

By completing these steps, you ensure the sale is legally binding and both parties are protected.

Insurance Matters

When selling a car to a friend, handling insurance is an important step. Both you and your friend need to make sure the car is properly insured during and after the sale.

Cancelling or Transferring Insurance

How to cancel your current insurance policy: Contact your insurance company to inform them about the sale. They will guide you through the process of cancelling your policy or transferring it if needed. Make sure you get confirmation that the policy has been cancelled.

How your friend can set up their new insurance policy: Your friend should contact their insurance company to set up a new policy for the car. They will need the car’s details, including the VIN and registration number. It’s important for your friend to have insurance in place before they drive a car.

Final Steps

The final steps in selling your car to a friend is important to ensure everything is properly completed. Here’s what you need to do:

• Handing Over the Car 

Now make a checklist for the final handover. Make sure you give your friend all of the keys, the car’s registration documents, the roadworthy certificate, and the owner’s manual. This guarantees that your friend gets everything he or she needs to start using the car right away.

• Keeping Records

Keep copies of any sale-related documents. This includes – bill of sale, transfer forms, and any communication related to the transaction. Keeping these records will benefit both you and your friend in the event of any future queries or issues.

Conclusion

Selling a car to a friend can be simple if you take the proper preparation. Make sure that you have met all legal requirements, agreed on a reasonable price, and completed all necessary paperwork. By doing so, both parties can have a clear and simple transaction.