Money & Debt

The following question was originally submitted to John Roska, a lawyer Someone who represents clients in courts or who gives legal advice and writer for the weekly column "The Law Q&A" in the Champaign News Gazette. The article has been updated to include changes in the law and additional information. 

Question

What do I have to do when I sell my car to someone? How much paperwork is required? Do I have to pay any tax?

Answer

The following applies to sales between private individuals. The process is different for sales made by car dealers.

To legally transfer the car, you must sign the title over to the buyer.

“Signing the title over” means signing on the “Assignment of Title” part of the title. The seller must also certify the vehicle’s mileage. They must also make sure the Vehicle Identification Number (VIN) on the vehicle matches the VIN on the title. You should also keep a photocopy of the old title.​​

If you own your car along with another co-owner, all co-owners must sign. Spouses are the most common co-owners, but there are other types of co-owners as well. Whoever the co-owners are, they must all sign the title over to the buyer.

You should also have the buyer sign a Bill of Sale. A Bill of Sale acts as a sales contract documenting the sale of the vehicle. It should identify the vehicle’s make, model, year, body type, color, VIN, purchase price, and date of sale. It should also name the seller and buyer, and include their addresses. It should be signed by both seller and buyer. Each should get a copy. While it is not required by law, it’s a good idea to have a Bill of Sale signed by both seller and buyer. That documents the fact that the vehicle was in fact sold. This can protect you if something happens before the title is transferred. For instance, if the buyer wrecks the car before actually transferring the title into their name.

There’s a detachable form on the title. The seller can fill it out and mail to the Secretary of State. That can protect against problems caused if the buyer doesn’t get a new title.

You should also cancel your insurance on the vehicle and check to make sure your old title is canceled. You should keep your license places. Do not transfer them along with the vehicle. The seller should get a copy of the buyer’s driver’s license or the ticket in place of their license. That can help prove the seller’s identity, if issues arise later.

It’s the buyer’s job to get a new title. They submit the assigned title with an application for a new title (form VSD 190). They also submit the Department of Revenue’s form RUT-50. Both forms are available from the Secretary of State.

The buyer must pay $95 to the Secretary of State, and a tax to the Department of Revenue. For vehicles worth less than $15,000, the tax is based on the age of the vehicle. It starts at $390 for a one-year old vehicle. It ends with $25 for vehicles at least 11 years old. It’s only $15 if the transfer is between family members, like spouses, parents and children, and siblings.

To transfer their own license plates to their newly acquired vehicle, the buyer must pay another $25 to the Secretary of State.

Finally, if the seller determines that the buyer didn’t promptly get a new title, the seller should cancel the old one. That’s another way to protect against liability if the buyer wrecks the car.

Note: As of August 2024, it is a Class A Misdemeanor A lesser crime punishable by a fine or confinement in county jail for up to one year. to knowingly install, sell, or trade vehicles with fake, non-working, or improperly installed airbags that don’t meet federal safety standards. It’s also illegal to use devices that trick the car into showing the airbag system is working when it isn’t.