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How to Sell Your Car to Tough Customers: Friends and Family

Jan. 22, 2020
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There’s a lot of misplaced fear around selling cars to friends. People seem to imagine that the car will conk out the day after the sale and your friend or relative will never speak to you again.

That could happen, sure. But handling the sale correctly makes both of those things less likely.

I’ve been down this road many times, selling — and even buying cars — from friends and family without any problems. In fact, done correctly, selling to a friend is a great way to save time and money for you both. Here’s what I’ve learned about friendship and sales:

What you owe your friend

Realistic expectations

Are you selling a battered, 10-year-old economy car for a few thousand bucks? Then be frank and tell your friend the future is uncertain but hopefully, there’s a good year or two of driving left in it. But if you’re selling a 3-year-old luxury SUV, the stakes are high — along with your friend’s expectations.

Full transparency

I hope it goes without saying that you should be completely open and honest with your friend about the condition of the car you’re selling. In fact, transparency is the key to preserving goodwill. Here’s how to shed light on your car and its past:

  • Disclose any accidents, damage or issues. If you’re selling a car that had a harmless fender bender, it’s best to reveal that right upfront rather than let them discover it later on their own.
  • Recommend an independent inspection. Used cars are sold “as is,” meaning that if a problem occurs after the sale, the seller is under no obligation to repair the car or refund money. So, encourage your friend to take your car to a trusted mechanic; it will protect you as well. The buyer is usually expected to pay for this.
  • Suggest a vehicle history report. Carfax and AutoCheck provide reports listing owners, service and any major incidents such as an accident. And, yes, the buyer should pay for the vehicle history report too.
  • Provide all service and repair records. Even if you don’t have receipts, jot down a list of recent service visits and the date they were performed. You can also provide the name of your mechanic for your friend to call for more information.
  • Be clear about future repairs. Are there any unresolved problems with the car? Will it need new tires or a battery soon? Tell your friend about any work you’ve delayed doing — and consider setting the price accordingly.

A deal that’s fair to you both

You might feel obligated to cut a deal for your friend. That’s your call. But before your generosity kicks in, look up your car’s value on sites such as Edmunds, Kelley Blue Book and NADA. Check both “private party” prices and trade-in values. If you decide to be generous, price the car at trade-in value (or whatever CarMax offers you) plus whatever your state’s sales tax is on that amount. That will be a good deal for your friend and you’re no worse off for selling it outright.

How to work out the details

Payment

It’s customary to be paid in cash, or with a cashier’s check, at the time of the sale. But sometimes, friends will promise to pay you all or part of the sale price later. I highly recommend avoiding any agreement to delay payment or to accept payment in installments. Loans, even with friends, can quickly lead to tension.

Outstanding loans

If you still owe money on the car you’re selling, discuss how to handle the sale early on. It’s easy to sell a car with a loan, but it will require extra steps — for example, a cashier’s check to pay off the bank and another for any equity you have.

Paperwork

Check with your state’s department of motor vehicles to find out what’s required to transfer ownership of the car to your friend. Often, the necessary paperwork, and even a template for a bill of sale, can be downloaded. Here’s what most states require:

  • Title. This is often called the “pink slip,” and it’s the most important document to prove ownership of the vehicle. When you sign the title over to your friend, it releases your claim to the car.
  • Bill of sale. It’s a good idea to make a bill of sale even though it might not be required by the DMV. It can serve as a record of the sale and the price paid.
  • Transfer of ownership. Most states have a separate document to transfer the car from the seller to the buyer. Print out the online form for your friend, who can then register the car.
  • License plates. Find out whether the tags go with the car or stay in your possession.
  • Sales tax. The buyer will have to pay sales tax when registering the car. In some cases, your friend might ask you to adjust the bill of sale or report a lower selling price to save money. This is up to you and your conscience.
  • Release of liability. Many states have a special form that records the date and car’s mileage when it was sold. Then, if the buyer has an accident or gets a parking ticket, you can prove the car no longer belonged to you. Fill out this form online or mail in a hard copy.

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