There are a lot of misplaced fears around selling cars to friends. People seem to imagine that the car will shut down the day after the sale and your friend or relative will never speak to you again.

It could happen, of course. But managing the sale properly makes both of these things less likely.

I have walked this road many times, selling – and even buying cars – to friends and family without any issues. In fact, if done correctly, selling to a friend is a great way to save both time and money. Here’s what I learned about friendship and sales:

What you owe your friend

Realistic expectations

Are you selling a dented 10 year old economy car for a few thousand dollars? So be upfront and tell your friend that the future is uncertain, but hopefully they have a good year or two of driving left. But if you’re selling a 3-year-old luxury SUV, the stakes are high, and so are 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 are selling. In fact, transparency is the key to preserving goodwill. Here’s how to shed some light on your car and its past:

  • Disclose any accident, damage or problem. If you are selling a car that had a harmless fender, it is better to reveal it up front rather than let it find out later on its own.

  • Recommend independent inspection. Used cars are sold ‘as is’, which means that if a problem arises after the sale, the seller has no obligation to repair the car or refund the money. So, encourage your friend to take your car to a trusted mechanic; this will protect you too. The buyer is usually required to pay for it.

  • Submit a vehicle history report. Carfax and AutoCheck provide reports listing owners, service, and any major incidents such as accidents. And, yes, the buyer should pay for the vehicle history report too much.

  • Provide all maintenance and repair records. Even if you don’t have receipts, write down a list of recent service calls and the date they were made. You can also provide your mechanic’s name for your friend to call for more information.

  • Be clear about future repairs. Are there any unresolved issues with the car? Will he need new tires or a battery soon? Let your friend know of any work you’ve delayed and consider pricing accordingly.

A deal that’s right for you two

You might feel pressured to make a deal for your friend. It’s your call. But before your generosity shows up, research your car’s value on sites like 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 its trade-in value (or everything that CarMax offers you) plus your state’s sales tax on that amount. It will be a good deal for your friend and you are not worse off to sell it outright.

How to work on the details


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

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 additional steps – for example, a cashier’s check to reimburse the bank and another for any equity you have.


Check with your state’s Department of Motor Vehicles to find out what is needed for transfer of ownership from the car to your friend. Often the necessary documents, and even a bill of sale template, can be downloaded. Here’s what most states require:

  • Title. This is often referred to as the “pink ticket” and is the most important document to prove vehicle ownership. When you give the title to your friend, it frees up your right to the car.

  • Deed of sale. It is a good idea to make a bill of sale even though it may not be required by the DMV. It can be used 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 if the labels accompany the car or remain in your possession.

  • Sales tax. The buyer will have to pay sales tax when registering the car. In some cases, your friend may ask you to adjust the bill of sale or declare a lower sale price to save money. It depends on you and your conscience.

  • Disclaimer of Liability. Many states have a special form that records the date and mileage of the car when it was sold. Then, if the buyer has an accident or gets a parking ticket, you can prove that the car was no longer yours. Complete this form online or send us a hard copy by mail.

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