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How to Purchase or Sell a Car Privately in Arkansas: What Paperwork Do You Need?

With tax return season upon us, I thought some of you might appreciate a walk-through on how to sell or purchase a vehicle privately, rather than through a dealer.  

A note: there are dozens of articles out there about how to sell or buy a car via Craigslist.  Many of those articles discuss how to determine a fair price, how to safely arrange a test drive, and how to inspect a vehicle to ensure that it’s roadworthy.  I’m not going to repeat any of that. 

Rather, this is a guide to the process and paperwork of a private sale in Arkansas.  This guide is really for uncomplicated vehicle sales, so if you have a more complicated situation (unpaid debt, out of state liens or titles, etc) just shoot me an email and I’m happy to help.

Step-by-Step Guide to Completing the Sale of a Vehicle
  1. Arrange a test drive;
  2. The purchaser can arrange for a mechanical inspection (optional, but recommended);
  3. Agree on a purchase price;
  4. Arrange a place to complete the sale (the lobby of a bank is usually the best place);
  5. Meet at the designated location and complete the paperwork (the title and two copies of a bill of sale):
    • The seller should bring the title, sign it, and give it to the buyer;
    • Either the seller or buyer should bring two copies of the bill of sale, fill them both out, then the buyer and seller should sign both copies;
    • Both copies of the bill of sale should be notarized (optional, but recommended);
    • The buyer and seller should both get a copy of the notarized and signed bill of sale;
  6. The buyer and seller should exchange the money (cash is best, cashier’s check OK, regular check is worst) for keys and vehicle;
  7. The buyer should take the bill of sale and title to their local DMV office in order to assess the vehicle, have a new title made, pay taxes on the vehicle, and get registration for the vehicle.
Below is more detail on the paperwork for those of you that are interested.

A Title

You’re probably familiar with a car “title.”  It’s the funny piece of official-looking blue paper that has the VIN # of your vehicle on it.  In Arkansas, it looks like this.  If the title is a different color, then it’s a “rebuilt” or “salvage” title, which means you probably shouldn’t buy the vehicle.

The title of a vehicle is incredibly important.  If your name is on the title, you are presumed to be the owner of the vehicle.  To sell or buy a car, the current title-holder needs to sign the title over to the purchaser of the car.  There’s a line on the title for such a signature.

WARNING: If the person you’re buying a car from does not have the title, then you have a problem.  Do not exchange money unless you get a signed title in return.  Also, if a lien is reported on the title, the seller should also produce a lien release.  The lien and lien release should be indicated on the face of the title.  A lien indicates that money is still owed to a lender for the vehicle.  If you buy the vehicle with a lien on it, you now owe that money. 

If the seller of the car still owes money on the car, she may not have the title.  It will be held by the bank or the dealer until the car is paid off.  If this is the case in your situation, then your deal has three individuals involved, not two.  Whatever is the case, make sure the title is produced before money is exchanged.

A Bill of Sale

A bill of sale is a contract that states the terms of the money-vehicle trade.  I have prepared a basic bill of sale that you can use.  It’s available here. 

Some folks do not think you need to use a bill of sale; instead, they simply use the back side of the title.  This is a mistake.  The bill of sale I’ve created contains all of the necessary language to complete a vehicle trade, and it makes the sale of the vehicle “as-is,” which protects the seller if the buyer gets buyer’s remorse and protects the buyer by giving the buyer an incentive to inspect the vehicle thoroughly before purchasing it. 

The bill of sale should be completed by both the buyer and seller at the time the vehicle and money are exchanged.  If a notary is present to notarize, all the better.  Both the buyer and seller should get a copy of the signed bill of sale. 


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