How to Write a Used Car Bill of Sale

Before you close the deal on a second-hand car, both the buyer and seller have plenty of responsibilities to tend to, from transferring the title to paying taxes to signing a release-of-liability form. On the buyer's end, a used car bill of sale is not always a hardline legal requirement, but it can help prove that you're the new owner of the car – think of a used car bill of sale as your receipt, which'll come in especially handy if you happen to get pulled over right after making your purchase.

Though the basic structure of the transaction remains pretty universally consistent, every state has its own laws for buying and selling cars. Before you worry about how to write a bill of sale, it helps to know if your state's Department of Motor Vehicles requires you to have one in the first place.

While it's never a bad idea to write one up, these 16 states make having a used car bill of sale a legal requirement:

• Alabama
• Arkansas
• Colorado
• Connecticut
• Hawaii
• Idaho
• Maine
• Nebraska
• New York
• Ohio
• Rhode Island
• South Dakota
• Vermont
• Washington
• West Virginia
• Wyoming

In addition to the bill of sale and the actual price of the car, be prepared on the tax front. While sellers don't have to pay taxes when they sell a car for less than they paid for it (as is usually the case when selling a used car), selling a car at a markup is considered a capital gain and must be reported on annual income taxes. Buyers must pay a sales tax on the transaction, due to the DMV upon registering the vehicle, except in states that don't have sales taxes.

First off, headline your bill of sale with basic info like the state and county of the transaction, the exact dollar amount of the sale and the printed full names of the buyer and seller, alongside each party's full street address and phone number. Then you can get into the meat of the document.

The bill of sale aims to provide evidence that the transaction between the buyer and seller took place and to declare that the vehicle's odometer reading has been made clear to both parties, because federal law requires mileage to be stated upon transfer of ownership. As such, you'll want to start your bill of sale with a simple statement of agreement. Rocket Lawyer recommends something like the following:

"For and in consideration of the sum of [vehicle sale price] U.S. dollars, paid by [form of payment], the receipt and sufficiency of which is hereby acknowledged, [seller's name], presently of [seller's full current address], does hereby sell, assign and transfer to [buyer's name], presently of [buyer's full current address], the following described motor vehicle."

That's where you'll put details about the vehicle, including:

• Make
• Model
• Year
• Body type
• Color
• Vehicle identification number (VIN)
• License plate number
• Odometer reading at the time of sale

After you've covered the key details, write up a brief section (a.k.a. the "odometer disclosure") acknowledging that the odometer reading reflects the current and actual mileage of the vehicle to the best of the seller's knowledge and that it has not been altered in any way while in the seller's position. Both the buyer and seller should sign and date this section to verify the odometer statements contained in the bill of sale.

Include a final signature section for both the buyer and seller to sign and date, which verifies the truthfulness of the document and seals the deal. A standard statement such as "I certify (or declare) under penalty of perjury under the laws of the State of [state of sale] that the foregoing is true and correct." In this statement, you may also acknowledge that the vehicle is being sold as-is with no warranty, that the buyer has had a chance to inspect the vehicle and that the buyer has agreed to purchase the vehicle in its existing condition, just for extra legal insurance.

Both the buyer and the seller should retain a copy of the signed bill of sale. If you live in one of the 16 states that legally requires a used car bill of sale, don't forget to make a signed copy for the DMV, too.

If you're still not crystal clear on how to write a proper bill of sale, don't hesitate to get a leg up. First, check your DMV's website (especially if you live in a state that legally requires a bill of sale); many DMVs across the country offer blank bills of sale online for free, ready for you to print and fill out. Sometimes, this document may also live on your state's Department of Revenue website. Likewise, the DMV and DOR usually keep hard copies of the form on-hand, if you'd rather show up in person.

Pre-made bill of sale templates can be a big help, too, allowing you to download a blank bill of sale and plug in your own info before printing. Take a look at sites such as eForms, LawDepot, Rocket Lawyer or FormSwift for free templates that'll kick start the process of writing a bill of sale for your car.