What's a Car Sale Contract With Payments?

Standardized Legal Documents What's a Car Sale Contract With Payments?

Get Your Wheels With a Car Sale Contract With Payments

Buying a new car can drain your wallet. If you cannot pay in full, you might want to opt for monthly installments. 

If drafting the contract seems complicated, we’ll explain what you need to include and help you create a valid legal document. Avoid wasting time and energy and use DoNotPay!

How Does a Vehicle Sale Contract With Payments Work?

A car sale agreement with payments is a binding contract between a buyer and a seller where both parties agree the amount is paid in monthly installments. This contract comes in handy when the buyer cannot cover the sum immediately. In most cases, the buyer and the seller agree on the:

  • Down payment—Upfront payment of 10–20% of the purchase price
  • Interest rate—Variable rate depending on the credit score of the buyer
  • Term of payment—The average duration of the payment period is 36-60 months

You can get the money you need for a car in different ways, so let’s check them out.

How To Finance Your Car

If you can’t pay for your car at once, you can choose one of the following options to finance the purchase:

  • A bank loan
  • Dealership financing
  • Seller financing

Borrow the Money From a Bank

Getting a loan from a bank means you agree to pay back the amount they gave you, plus a finance charge and interest, over a predetermined period.

You can check the loan terms in various banks and select the most convenient one. Once you find out how much money you can borrow, it will be easier to choose the car you can afford.

Dealership Financing

You can make an agreement with the dealer to pay for the car in monthly installments. In most cases, the dealer sells the contract to a bank. You have to pay the interest as well. The benefits of dealership financing vs. bank loans are: 

  1. Convenience—You get all the information about the loans in one place, see the cars, and close the deal on weekends or even evenings
  2. More financing options—Dealerships usually cooperate with different banks and finance companies, offering various financing choices
  3. Special programs—You can get a manufacturer-sponsored, low rate, or incentive program at some dealerships. The programs can be limited to certain brands

Seller Financing

If you can’t get the money from a bank or a dealership because of a bad credit score, you can choose seller financing. The owner of the car assumes the role of a lender, and you pay the money back in installments. You must give a down payment, and you’ll pay interest on the borrowed amount. 

An owner of a car can ask you to sign a promissory note if he/she finances your purchase. This is a legally binding document that the lender and borrower sign. The borrower promises to pay back the loan under certain terms and conditions.

What Should I Put in My Car Sale Contract With Payments?

A contract for buying a car in installments should contain:

  1. The names of the seller and the buyer
  2. A detailed description of the car
  3. Price 
  4. Financing policy
  5. Down payment
  6. Interest rate
  7. Monthly installments
  8. Pay-off period
  9. Sales tax
  10. Delivery policy
  11. Description of the vehicle’s condition
  12. Signatures of the seller and the buyer

You may sign the contract in front of a witness, typically a notary public.

What Is a Bill of Sale, and What Does It Include?

After finalizing the payment, you should obtain a bill of sale. It is a legal document proving you are the owner of the car. Include the following when drafting your bill of sale:

  1. The names and addresses of the buyer and the seller
  2. Details of the vehicle—model, year, color, etc.
  3. Vehicle Information Number
  4. Mileage
  5. Price
  6. Date of the sale
  7. Signatures of both parties

Should I Lease a Car Instead of Buying It?

When you lease a car, you can use it for an agreed number of months and miles. 

The monthly payments on a lease are usually lower than monthly purchase payments. At the end of the lease, you return the car or buy it if the lease agreement allows you to.

To find out whether you should lease a car, ask yourself:

  • How much will I drive the car?
  • What are the costs of a lease compared to the costs of purchase?
  • Is there a possibility I will move during the lease period?
  • How long do I want to keep the car?

This option may be better if you are not sure whether you want to buy a particular car or not, or you change your mind frequently.

DoNotPay Helps With Creating Legal Documents

With DoNotPay, you can easily get a contract! You don’t have to hire a lawyer and pay a fortune. Here is how it works:

  1. Open DoNotPay in your browser
  2. Type in the contract name
  3. Provide our chatbot with the necessary information

Once we get all the info, our AI-powered app will generate your document. Always sign or notarize it to make it official.

We enrich our offer of customizable contract templates every day, but for now, we can help with:

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