Purchase Agreement for Vehicle Template

Are you buying or selling a new or used car, truck, or motorbike? Structuring the transaction can be a headache if you’ve never had to do it before. There are plenty of things to think about when fleshing out the deal and if you miss information in the vehicle bill of sale it could affect the transfer of ownership.

While a vehicle doesn’t cost as much as a house, it’s still a big purchase for many people, even if you’re buying a used car or bike. Prepping the deal can be a stressful experience. Chances are you’re not a contract lawyer, and this might even be the first time you’ve ever bought a vehicle, making it unchartered territory that leaves you feeling overwhelmed with the task. 

The FreshDox team decided to make things easier for you. We’ll walk you through everything you need to know about structuring a purchase agreement for your new purchase (or sale of your old car). We also have a proposition for you at the end of this post where you can get a free download of our Purchase Agreement for Vehicle Template.

What Is a Vehicle Sale Agreement?

Any purchase of a vehicle, whether that’s a truck, car, motorcycle, or even an ATV requires a contract to govern the terms and conditions of the deal. The purchase agreement acts as a bill of sale between two parties, namely the buyer and seller. Upon signing, it becomes a binding legal document between the parties‌, transferring ownership of the vehicle from the seller to the buyer.

The purchase agreement for the deal outlines the parties involved, the payment terms, and the motor vehicle information. Here’s a quick breakdown of the basic provisions involved in the contract.

• Full name of the parties to the transaction (Buyer, seller, co-owner).
• Date of the sale.
• Vehicle Details.
• Condition of the vehicle.
• Total purchase price.

The contract also specifies the duties of the buyer and seller in the deal. Ultimately, the agreement offers buyer and seller protection to prevent one side from taking advantage of the other. 

You might have heard the vehicle purchase agreement referred to as a sales agreement or sales contract, but these titles all have the same meaning and the contract has the same purpose of facilitating the transaction between the buyer and seller.

The buyer must be fully aware of every aspect of the deal before signing the contract. If they discover something they didn’t expect a few weeks or months after taking ownership, and it’s not covered in the agreement, then it’s a problematic situation, and the buyer may have no legal recourse against the seller. 

What Do You Include in a Vehicle Purchase Agreement?

The provisions involved in structuring a vehicle purchase agreement differ between private sales and dealerships. If you’re buying a new car or a pre-owned vehicle from a dealer, the contract T&Cs can be fairly extensive. 

For the purposes of a private sale and structuring a basic contract between the parties, the agreement should feature the following provisions.

Personal Details of the Seller and Buyer

This section includes the contact information of both parties to the deal, including their names, physical addresses, and phone numbers.

Vehicle Identification 

Without a doubt, inspecting and verifying the Vehicle Identification Number (VIN) is the most critical part of the deal for the buyer. If a criminal tries to sell you a stolen car and you don’t check the VIN and the details of this unique identifying number on the contract, you could wind up in serious legal trouble. 

Essentially you would be purchasing a stolen vehicle, and you could even wind up being convicted of Grand Theft Auto or a related criminal charge. To avoid falling prey to criminals, check the VIN at the National Registry or the local police services to see if it’s stolen. You’ll find the VIN somewhere around the driver’s side door or on the windshield. 

This section of the agreement also features a brief description of the vehicle. It should list the vehicle make and model, the body color and body type (sedan, hatchback, etc.), and the mileage on the odometer. 

Condition of the Vehicle

The agreement must outline the vehicle’s current condition, whether it’s used, new, or currently not roadworthy or running. The seller must also list any problems with the car, such as mechanical faults and cosmetic damage. If the car is still under warranty the seller should mention if this warranty is transferable to the buyer.

This section is useful to the buyer in a used car deal as it gives them a chance to see what’s wrong with the vehicle and negotiate a discount with the seller based on the disclosures revealed. For instance, if the sunroof doesn’t work, the seller might agree to discount the cost of repairs from the original purchase price. 

It’s important to put this in writing. For instance, if the car costs $5,000, and the sunroof repair is $300, the seller must write the discount into the “Other Provisions” field in the contract stating that they gave the buyer a discount for the faulty sunroof. These provisions apply to any parts of the vehicle that might need repairs, such as shock absorbers, brakes, tires, clutch, etc. 

Price and Financing/Payment Terms

In this section, the buyer lists the sale price of the vehicle agreed upon by both parties. The contract should specify the payment method for the transaction, such as cash or bank transfer, and any discounts the seller offers the buyer. 

If the parties agree to a financing option with monthly installments, mention the amount due each month, the total number of installments to be paid, and when the payment period ends (i.e., six-month loan term with $500 due every Friday or once a month on the 30th. The contract should also mention if the buyer is making a downpayment in the financing deal. 

It’s important for the seller to note if there are currently any liens on the vehicle and if the buyer is taking over these commitments or if the seller is settling the outstanding amount before handing over ownership.

Private sales of used vehicles in America are subject to sales tax. The buyer is responsible for paying this amount, not the seller. The sales tax varies by state. For example, if you buy a car from a relative or friend in Texas, you’ll need to pay a 6.25% sales tax on the total amount paid for the vehicle.

Interest Rate (APR)

If you’re buying a used car from a dealer and using finance for its purchase, check the interest rate (APR) before signing the agreement. The interest should be clearly itemized in terms of the percentage and dollar amount for the transaction. 

If it’s not clearly spelled out to the buyer it may lead to discrepancies and confusion if the buyer doesn’t understand why they’re paying more than they initially thought. If you’re buying or selling to or from a car dealer, make sure you agree to the following terms. 

• Vehicle purchase price.
• Financing details, including monthly payments.
• Finance charges.
• Admin or document fees.

Charges for Services or Agreed-on Free Accessories

There are some fees that apply only to purchasing used vehicles from car dealerships. These fees don’t apply to private party sales. These fees may include the costs of a vehicle inspection, services, or parts used in servicing or repairing the vehicle. 

If the vehicle has a GPS or other non-standard aftermarket accessories, such as mag wheels, the buyer and seller must agree on whether these items are included in the deal or require additional fees. If the seller doesn’t mention this in the contract it may cause issues with the buyer if they were expecting these accessories to come with no additional cost.

What are the Rights and Duties of the Seller?

The seller must inform the buyer of any problems with the car and they must deliver a car matching the vehicle description outlined in the contract. The seller must also provide the buyer with written documentation such as the vehicle title, service history, manual, and receipts, where applicable and available.

It’s essential for the seller to be honest in the negotiations leading up to finalizing and signing the purchase agreement. The seller must disclose information regarding past repairs, accident damage, and major mechanical or electrical issues with the vehicle, such as engine faults or wiring problems. 

It’s wise for the seller to write a disclaimer into the agreement stating that the car is sold “as is.” This clause means that if a fault occurs with the vehicle after the buyer takes ownership, the seller isn’t liable for the cost of repairs. 

What are the Rights and Duties of the Buyer?

The buyer’s responsibilities are to review the legal standing of the vehicle by checking the VIN information. They must also test drive the vehicle and inspect it properly, preferably with a third-party service provider, before signing the contract and formalizing the deal. 

Note that the inspection and test drive are non-negotiable parts of the deal and are required by law before purchasing a vehicle. The buyer must also insure the car before taking delivery.

Review the Document Before Signing

The buyer must review the agreement before signing. By law, the seller may accept an e-signature on the contract. The agreement becomes valid as soon as they e-sign the document. The buyer should also check the delivery date for accepting and transferring ownership of the vehicle from the seller. If you’re uncertain about any of the provisions or terms and conditions of the contract, send the agreement to a contract lawyer for review before signing.

It’s best to use an electronic bank transfer to pay for the vehicle because the buyer can track the payment and prove they paid for the vehicle. If you’re paying cash, add a clause to the contract stating that it was a cash deal and get the buyer to sign the contract stating that they received the cash amount.

If the buyer and seller haven’t met, for instance, if they reside in different states, it’s advisable to make a down payment on the vehicle. The buyer will pay the outstanding balance after accepting delivery. This approach mitigates the risk in the deal for both parties. The buyer should also issue a receipt to the buyer after receiving the final payment. 

Private Used Car Sale Agreement Templates

A private used vehicle sale agreement is a written, legally binding contract between the buyer and seller. So, it’s important to structure the agreement properly to ensure the deal goes smoothly and there are no unexpected occurrences post-signing the contract. 

Simply writing out a basic contract covering the points in this article might suffice, but it creates room for error. It’s a better idea to use a customizable car sale contract template prepared by legal professionals.

The FreshDox vehicle purchase agreement form is a simplified document making it easy for buyers and sellers to protect their interests in the deal.

Download a Customizable Purchase Agreement for Vehicle Template from FreshDox

Don’t put yourself at risk by drawing up a DIY car sale contract template. Regardless if you’re the buyer or seller in the arrangement, writing up a valid legal document covering all the bases is the only way to ensure a safe transaction.

The FreshDox Purchase Agreement for Vehicle Template is prepared by contract law specialists and safeguards both parties to the deal. Our car purchase agreement is fully customizable and printable, edit the car sale contract, download it in PDF or Word format, and complete your transaction. 

Right now, you can get this template for free when you sign up for a 7-day trial of a Premium or Basic account on FreshDox.