How to Sell a Car to a Family Member

The process of selling a car to a family member is no different than selling a car to a stranger or dealership. However, it can be more emotionally complicated, particularly if you're loaning your family member money or requiring her to make monthly payments. It can be tempting to trust a loved one's word, but a sales contract can protect you and ensure that your family member takes her obligations to you seriously.

Obtain an Estimate

Get an estimate on the value of your vehicle from a reputable source such as Kelley Blue Book. Talk to your family member about price early, and decide whether you're going to give a discount and who is going to finance the sale. Some people opt to sell to their family members and finance the deal themselves, in which case your family member will be making monthly payments to you.

Come to an Agreement

Negotiate the terms of the deal. Address whether there will be a down payment, how and when payments will be made and, if you're financing the sale, how much interest you'll charge. Put the terms of the deal in writing. The contract doesn't have to be complex. It simply has to outline the down payment, monthly payments and any other terms to which you agree. If you plan to charge your family member late penalties if he doesn't pay or repossess the car if payments aren't made, you need to make this explicitly clear.

Complete the Transaction

Collect payment -- if you're requiring it -- from your family member, then sign over the title to her. This will make her the legal owner of the vehicle. Record an accurate odometer reading on the title. In some states, you'll also have to complete a bill of sale, so contact your state Department of Motor Vehicles to find out if you need to complete a bill of sale and learn what information goes on it.

Turn in Your License Plate

Remove your license plate from the vehicle. Your family member will have to either register for new plates or transfer your plates to her car. Ensure that she has insurance for the car before she drives it. While you won't be liable if your family member doesn't have insurance, making sure that insurance is taken care of can keep your loved one out of trouble.

Consider Your Relationship

If your family member doesn't make monthly payments on the car, this can cause serious disruptions in your relationship if you're providing the financing. It may be better to ask her to finance through a bank or credit union.

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