Car dealership paperwork: what every used-car sale needs

Every used-car sale runs on three kinds of paperwork. There's what federal law requires on every car you sell, what your state needs to move the title to the buyer, and the documents your dealership writes the deal on. Miss one and the deal stalls at the title office, or comes back to you months later.

The federal part is the same in every state. The state part isn't, and that's where most of the work is. This guide goes through all three in the order a sale needs them, then gives you a checklist for the next deal.

Federal paperwork on every retail sale

The FTC Buyers Guide

The FTC's Used Car Rule applies to dealers who sell, or offer for sale, more than five used vehicles in a 12-month period. If that's you, every used car on your lot needs a Buyers Guide while it's for sale.

• On the car: the FTC says the Buyers Guide must be displayed prominently and conspicuously on or in the vehicle. Hanging it from the rear-view mirror inside or a side-view mirror outside both work.
• Warranty or As Is: if you sell the car with no dealer warranty, use the "As Is" version and check the box next to "As Is-No Dealer Warranty". If you do give a warranty, check the "Warranty" box and fill in that section.
• At the sale: you must give the buyer the original or a copy of that car's Buyers Guide.
• Selling in Spanish: if you conduct the sale in Spanish, you must post a Spanish-language Buyers Guide on the car before you display or offer it for sale.

The FTC's Dealer's Guide to the Used Car Rule has the forms and the rest of the detail.

Odometer disclosure

When ownership of a vehicle is transferred, federal law requires the seller to give the buyer a written disclosure of the mileage, on the title. If the mileage isn't accurate, that has to be stated too. NHTSA lists two exemptions: a vehicle that's 20 years old or older, or one from model year 2010 or older (NHTSA).

So on most cars you'll sell today, the odometer reading goes on the title at the sale. If your state uses a separate odometer statement form, it's on your state's paperwork page.

IRS Form 8300 for large cash payments

If you receive more than $10,000 in cash for a sale, in one payment or in related payments, you file Form 8300 with the IRS. The IRS gives you 15 days from receiving the cash, and you also send the buyer a written statement by January 31 of the next year (IRS Form 8300 reference guide).

Cashier's checks are where dealers get caught out. On a car that sells for more than $10,000, a cashier's check, money order or bank draft of $10,000 or less counts as cash. A single cashier's check over $10,000 doesn't. So $8,000 in cash plus a $5,000 cashier's check is a filing; one $13,000 cashier's check on its own isn't.

This is a summary, not tax advice. If you take cash regularly, read the IRS guide or ask your accountant.

Your state's paperwork

This is the part that changes at every state line. The forms have different names and numbers, and the rules differ on who signs what, whether a notary is needed, and how temporary tags work. For most retail sales, you'll deal with:

• The title. The seller's signature, the buyer's details and the odometer reading, on the title itself or, in some states, on a dealer reassignment form when the title has run out of room.
• The title and registration application the buyer's paperwork goes in on.
• A bill of sale, either the state's own form or one you write. Our bill of sale guide shows which form each state uses and when it needs a notary.
• A power of attorney, when someone signs on another person's behalf.
• Temporary tags and the state's sales tax, collected at the sale and passed on to the state.

Paperwork by state lists the official forms for every state, each with a line on what it's for and a link to the state's own copy. Start there before your first sale, and check it again when a form changes.

The documents you write the deal on

These are yours rather than the state's, and they're the ones the buyer reads most closely:

• The buyer's order, or purchase agreement: the car, the price, every fee, the trade-in, the tax, and what's due.
• The retail installment contract, when you arrange financing. It's the lender's or your forms vendor's contract, not one you draw up.
• The trade-in's paperwork: its title, a payoff letter if there's a loan on it, and its own odometer reading.
• A written list of anything you've promised to fix after the sale, so nobody remembers it differently later.

What these documents say stays with you and your forms vendor or attorney. Software can fill in the blanks; it can't decide the terms.

A checklist for every sale

1. The Buyers Guide was on the car while it was for sale, with the right box checked. The buyer gets a copy.
2. The title is signed over with the odometer reading, or the car is exempt.
3. The buyer's order is signed, with every fee written out.
4. The financing contract is signed, if you arranged financing.
5. Your state's title, registration and bill of sale forms are filled in and signed, notarized where your state requires it.
6. Sales tax and title fees are collected and set aside for the state.
7. The trade-in's title or payoff letter is in hand.
8. Form 8300 is on your calendar, if more than $10,000 of the price came in as cash.
9. Copies of everything are in the deal jacket.

Fill it in once

Most of this paperwork asks for the same things over and over: the VIN, the buyer's name and address, the price, the mileage. GARAGEBIRDS has over 300 official state forms built in for all 50 states, and they fill in from the vehicle and the deal, on the Free plan. On Pro, Smart Print Forms does the same for your own buyer's order and contracts: here's how to set it up.

Not legal or tax advice. Rules and forms change, so check your state's own agency before you rely on any of this.

In GARAGEBIRDS: Built-in state forms for all 50 states, with auto-fill (Free plan).

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