Car Purchase Agreement

What is a car purchase agreement?

A car purchase agreement is a contract used to sell a vehicle from one party to another in exchange for a price or other remuneration. This is a simple transaction aimed at transferring ownership of a car or other type of vehicle.

A vehicle purchase agreement could be concluded between individuals or business entities. A seller under a car purchase agreement should be a legal owner of a car. It is also a possible scenario when a seller’s attorney acts on behalf of a seller by virtue of a power of attorney.

Once a sale-purchase agreement is signed by both parties, it should remain in full force until the parties perform their mutual obligations. For a buyer it means to pay a full purchase price, and for a seller to transfer title ownership for a purchased vehicle to a buyer.

When a car sale-purchase takes place in Louisiana, Maryland, Wyoming, Nebraska, or West Virginia, the presence of a notary is mandatory. Therefore, a Vehicle Purchase Agreement becomes valid upon notarization of the document’s last page.

Lease vs. Sale-Purchase Agreement of Vehicle

A key feature of vehicle purchase agreement is that title ownership over a vehicle is transferred permanently. This makes it different from a vehicle lease agreement, where one party gets the right of the vehicle’s temporary usage and possession.

Parties involved in a Vehicle Purchase and Sale Agreement are called buyer and seller. In Vehicle Lease Agreement parties are called lessor and lessee. A lessor could be an individual or business entity who intends to temporarily transfer usage and possession of a car or other vehicle for a specified period of time. In its turn, under a Vehicle Lease Agreement, a lessee undertakes to make regular payments for getting a car into a lease.

The possession and usage of a vehicle under the Vehicle Lease Agreement are determined. The term of the lease can last from a few days to a few years. Apart from regular lease payments, a lessee receives a set of additional responsibilities, including

• Maintain the vehicle in good condition. If a lessee fails to maintain good condition, a lease agreement could be terminated immediately.
• Do not be engaged in activities like car racing, tax, and similar.
• For excess wear and tear of a vehicle during the lease period, a lessee agrees to pay an additional price on top.

Please note that the available Vehicle Purchase Agreement Template on this page cannot be used for a vehicle lease. Please access the vehicle lease purchase agreement form instead.

Example of a Vehicle Purchase Agreement for real life situations

Our Vehicle Purchase and Sale Agreement template could be helpful in various circumstances:

• Types of Vehicles: When selling various types of vehicles, including bikes, trucks, cars, boats, etc. A document’s template could be used for the sale and purchase of both brand-new and pre-owned vehicles.
• Payment Model: when making either a one-off or regular payment for a car purchase. Our Vehicle Sale Agreement Template allows you to choose various payment methods for completing the transaction.
• Suitable for all 50 states: despite the geographical location of the buyer and seller, our Vehicle Purchase Agreement Form allows you to automatically adjust provisions of the final document depending on the selected state. Since local legislation may differ from state to state, rest assured that the final template will accommodate all necessary changes to deliver a legally binding document.

Can You Write a Vehicle Purchase Agreement without a Lawyer?

This is one of the most popular questions people ask themselves when it comes to buying a car or selling the old one. You can always get a customized motor vehicle sale agreement template from FasterDraft, which saves a lot of your time.

If you want to go the extra mile and draft your own document from scratch, we prepared for you below some helpful tips to keep in mind.

Which things to consider first while drafting a car sale purchase agreement?

Before entering into a motor vehicle purchase agreement for a pre-owned car, you need to investigate the vehicle’s history thoroughly in order to make an informed choice.

• Third Parties’ Rights: Before signing a car purchase agreement, check first if there are any third parties’ rights over a car or a vehicle. This party’s rights might include an existing car bank loan or vehicle lease agreement.
• Know the Owner: Before entering into an auto purchase and sale agreement, make sure you deal with a real owner. Do not hesitate to ask a seller to present a registration document like proof of car title or pink slip.
• Technical Inspection: Do not hesitate to hire a professional in order to inspect a vehicle’s engine and other parts to make sure everything runs smoothly. Even if you purchase a pre-used car, excess wear and tear might be a good sign to think twice.
• Vehicle’s History: Check in advance how a vehicle has been used in the past. Is there any record of car accidents, street racing, etc.? All this information can give you a better picture of a vehicle’s condition.

What Are the Components of a Vehicle Purchase Agreement?

A good Vehicle Purchase Agreement should contain the following mandatory terms:

• Buyer and Seller Details: Full details of the buyer and seller should be included in the text of a document. It is also recommended to include contact details like a phone number or email address to make sure parties may contact each other once there is any default in the future.
• Vehicle Details: Along with a detailed description of a vehicle to be sold, a unique Vehicle Identification Number (VIN) should also be included in the document. Always make sure that the vehicle identification number matches with a vehicle’s engine number.
• Odometer Details: The accurate odometer details should be included in the automobile purchase and sale agreement. Be aware that altering odometer details is a federal crime. Once you suspect that the odometer does not reflect the true mileage, do not hesitate to report this to the National Highway Traffic Administration.
• Sale Price and Payment Terms: Every sale-purchase agreement for a car or other motor vehicle should address the payment terms. Should the purchase price be paid in whole on a specific date, or should it be paid in installments? If paid in installments, should it be quarterly, weekly, or monthly payments? All those details should be clarified directly in the document.
• Hidden Defects: When it comes to a vehicle purchase contract for a pre-used car, some technical hidden defects can arise in the future. In that case, buyer and seller should decide together how and if those defects will be compensated by a seller. If there are certain defects that a seller clearly communicated to a buyer prior to a car purchase contract being signed, those defects cannot be considered hidden defects. If a buyer subsequently signs a sale contract, in that case it means that a buyer accepts those defects.
• Delivery of Vehicle: Parties need to set up a due date on which a vehicle will be delivered into the physical possession of a buyer. It could be a date of signing a car purchase agreement between the parties, a date of making a full payment, or any other date in the future. It is also essential to agree upon the place of a car delivery—buyer’s address, seller’s address, or any other pick-up location.
• Transfer of Ownership: A contract for the purchase of a vehicle should include a date on which a buyer becomes the new owner of a vehicle. It could be a date of signing the sale-purchase agreement of the vehicle, the date when a full payment is made, or any other date agreed upon by the parties.

Despite having a template or drafting your own one from scratch, it is always advisable to double-check it with your attorney.

Download Your Vehicle Purchase Agreement Template—What’s Next?

After you answer all questions in the questionnaire, you can download the Vehicle Purchase Agreement PDF or Word version. After printing out the document, the following formalities should be done:

Signing Vehicle Sale Purchase Agreement

The final document should be signed by both parties in order to become legally binding. The parties can sign the document on the same or on different dates. If a document is signed on the same date, it gets full force and effect from that date. If a document is signed on different dates, it becomes legally binding on the date of the last signature.

If a party to a vehicle or automobile purchase agreement is an individual, then they should sign this document in person. An attorney or third-party representative can also sign this document on behalf of an individual seller or buyer, provided they have a respective power of attorney.

If a party to a car sale-purchase agreement is a legal entity, in that case an entity’s director or other authorized person should sign a document.

As a general rule, signing an Automobile Purchase Agreement does not require the presence of a notary. However, if a vehicle or Automobile Purchase Agreement is concluded in states like Louisiana, Maryland, Wyoming, Nebraska, and West Virginia, the presence of a notary is mandatory.

Registration of a Title

This is a final stage of a car purchase process. The process of registration of title ownership is performed by the Department of Motor Vehicle of the respective state. For registration, the buyer would be required to provide the following documents:

Signed Vehicle Purchase Agreement;

• Prepaid insurance;
• Proof of paid taxes;
• Proof of payment of registration fees;
• Filled in application forms.