The Ins and Outs of a Car Sale Contract

Standardized Legal Documents The Ins and Outs of a Car Sale Contract

Going on the Road? Not Before You Sign Your Car Sale Contract!

Are you about to sell a car you don’t need or buy one you’ve always dreamed of having? In nine out of ten cases, purchasing a vehicle comes with signing a car sale contract.

Don’t worry if you have never seen this kind of legal document before. Read on to learn what car sales agreements are and how to write a contract yourself.


If you’re buying or selling a vehicle, you should also learn about car warranties, used cars warranties, and Enterprise car sales warranties.

What Is a Car Sales Contract?

A car sales contract is the official agreement between the seller and the buyer of an automotive vehicle.

The car sales contract details:

  • Name of the buyer
  • Name of the seller
  • The vehicle identification number (VIN)
  • Warranty and maintenance information

What Is the Truth-In-Lending Section in Automotive Sale Contracts?

A truth-in-lending disclosure element is particularly relevant to include in your car sale contract. Here’s what it includes and why it’s important:

The Truth-In-Lending Disclosure Sections What It Means

Finance charge

For the duration of the contract, the buyer has to pay an annual percentage rate. The finance charge specifies what that amount is in dollars. 

Total sale price

This section identifies the total price of the vehicle when all contract-related payments are made.

Annual percentage rate (APR)

The buyer needs to agree upon the APR they will pay in interest to cover the entire cost of the car.

Total payment

When the total amount of the installments is multiplied by all the installments the buyer has to pay, you get the total payment price.

Amount financed

Amount financed includes all the payments the buyer needs to cover to make a purchase, excluding the down payment.

What Buyers Need To Watch Out For When Signing Auto Sale Contracts

Only because car sales contracts are more straightforward than some other legally binding agreements doesn’t mean you shouldn’t review them carefully before signing.

When negotiating a car sale, a buyer needs to avoid these common mistakes:

  • Accepting any add-ons or other free items before the seller specifies they are free in the contract
  • Not researching the loan terms thoroughly before agreeing on the interest rate
  • Failing to review the contract carefully to spot any hidden fees
  • Not double-checking that their personal information is correct before signing the contract
  • Omitting to specify what the agreed trade-in value is if one vehicle is being traded in for another

How To Write a Vehicle Sale Contract on Your Own

Since a car sale contract isn’t too complex, you can write your own document. You should:

  1. Identify the parties involved
  2. Provide the vehicle description
  3. Establish the sale date and purchase price
  4. Specify the delivery method
  5. Disclose car title information
  6. Sign and notarize the contract

Identify the Parties Involved

You should list the names, addresses, and driving license information of both the seller and the buyer in the contract.

Provide the Vehicle Description

It’s important to be as specific as possible when detailing the vehicle description in the contract. Make sure it includes the information about:

  • Year
  • Model
  • Color
  • Interior color
  • VIN
  • Odometer reading
  • Body type

Establish the Sale Date and Purchase Price

Depending on what kind of deal you strike with the other party, the payment method can be simple or complex. For example, the buyer may pay the total price right away or agree to purchase the vehicle in installments. In either situation, the purchase price and payment method should be specified in the document clearly.

You should also state the date when the transaction will take place.

Specify the Delivery Method

If you live in the same area as the other party, you probably won’t need this section in your contract. If you need to resort to any other delivery method other than driving the vehicle from one party to the other, state it in the contract and specify who will bear the cost of delivery.

Disclose Car Title Information

Owners of the vehicle need to identify the status of the car’s title. Legal owners must state that they have full authority to sell their vehicle and warrant the title.

If a bank owns the vehicle or the seller is still making payments for it to another party, the seller should write them a payoff letter. The bank or another institution can then state what amount of money the buyer needs to cover before they purchase the car.

Sign and Notarize the Contract

When you include all the necessary information in your contract, you can print it and sign it with your partner.

In most states, you may not be legally obliged to notarize the contract or have a witness sign it. This is still advised since it provides a level of protection in case any legal disputes arise.

A Car Sale Contract Confuses You? DoNotPay Has Got You Covered!

Does the mere thought of having to deal with legal documents make you sweat? Most contracts out there are complicated to understand. Because of that, the majority of people hire lawyers—who can cost an arm and a leg—but you don’t have to be among them!

DoNotPay can get you a personalized contract template for many different situations. The best part is that the entire process requires only a few minutes.

Here’s what you should do:

  1. Access your DoNotPay account from any web browser
  2. Give us the name of the document you need
  3. Follow the prompts

There you have it! DoNotPay will create the legal document you need in no time.

Here are the most common contracts DoNotPay generates:

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