How to Write a Contract for Buying a Car

The more information in a car sale contract, the better.

The more information in a car sale contract, the better.

Buying a car from someone other than a dealer can be a tricky proposition, requiring you to get as much as possible in writing. A handshake won’t cut it when it comes time to address issues that weren’t disclosed before the sale. Make a car sale contract as complete as possible. Add as much information as you can think of to protect yourself from both unscrupulous sellers and honest miscommunications.

Name the Parties

Write the names of both parties at the top of the contract, noting that they are engaging in a contract to sell a specific car. Use full names and addresses so you can find the person later if necessary. For example, write, “The following is a contract for John M. Smith, 123 Main Street, Wheaton, IL, to sell a 2009 Honda Accord to Fred L. Banks, 234 Oak St., Glen Ellyn, IL.”

Describe the Car

Describe the car’s details in one paragraph of your contract, being as specific as possible. Include the make, model, year, body style (such as sedan or coupe), vehicle identification number (VIN) and the mileage. Look for the VIN on the inside edge of the driver’s side door, on the dashboard, on the engine or on insurance documents. Note the condition of the car inside and out. When the selling price is low, some states require you to detail why. Your reasons can include the need for car repairs or the condition of the car.

Outline the Terms

Write the terms of payment. Include the full amount, any deposit amount, the date or dates of payments and what types of payment were agreed upon. If you give a deposit or down payment for the car, ask the seller to provide you with a receipt. Some private sellers accept only cash. If you can, however, try to make any payments by check as this creates a paper trail. Include any warranty information or guarantees, or note that the car is being sold as is. Outline how you will transfer the title in the contract. Depending on your state’s requirements, the seller might simply need to sign the title, or pink slip, over to the buyer. In other states, both parties will need to appear together before a notary.

Add a Disclosure Clause

Add a disclosure statement. Have the seller confirm that he has told you about any accidents, mechanical problems or damage to the car that he is aware of. Ask him to also confirm that he has no knowledge of any liens or claims against the car. Make note of any major defects to the engine, electronic systems and power train. As an added precaution, use an online service to provide a vehicle report before you buy to learn more about the car's ownership, damage and financial history. It may reveal something even the car's current owner isn't aware of.

Sign the Contract

Place the words, “Seller,” “Buyer” and “Witness” toward the bottom of the document in a signature area. Each party should have a witness. Include places for the buyer and seller to write their driver license numbers and the date. Include a statement that the information each party has supplied is true. Consider notarizing the contract for further protection.

Items you will need

  • VIN number
  • Title
  • Mileage

Warnings

  • Discuss how you will transfer title before you sign the contract. Depending on your state’s requirements, you might simply need to have the buyer sign the title, or pink slip, over to the buyer.
  • Use an online service to provide a vehicle report before you buy to learn more about the car's ownership, damage and financial history.
 

About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.

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