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Sunday, January 8, 2012

Basic Trading (The Paperwork)

Someone asked me, recently, "How do you do a trade? Do you just meet, swap pinks and then take off in each others cars?" Well, I wish it was as simple as that. To do a trade right, there are a few steps you need to do.

Before you meet up with the person you are trading with, make sure you get all the necessary paperwork, that I'm about to mention, to bring along with you.

First things first, both of you need to agree on the terms of the trade. If it is a partial trade, with money on top, you need to exchange payment upon filling out paperwork. (Find out more about terms of trades, here) Now that you both agree on the terms, you can start the paperwork.

First, and most importantly, you need the pink slip (or title). It is so important to fill out and sign this exactly the way the DMV wants you to. If you do it incorrectly, they will send you away until it is done right. You don't want to make that mistake. The seller must sign the pink slip TWICE! Do not sign where it says "leinholder." You can add the odometer reading if you like, but if you do, be sure to be exact on the numbers. This is optional. Only the person(s) on the title can legally sign the pink slip away. Here is a picture to help you understand.


Next, you need a Bill of Sale (Reg 135). Now this paper has a top and bottom portion that are exactly the same. Do not discard the extra portion. Fill them both out, have one for yourself (for your records) and one for the other person. You do not NEED to keep a bill of sale copy BUT consider my story. I sold a Saturn for $1,800. I kept a copy of the bill of sale, because I'm smart like that. The buyer didn't put the into his name. He ended up getting parking tickets and was in a hit and run accident, with the car still in my name. I was getting police at my door, I was getting harassing phone calls from the insurance company until I showed them my bill of sale. I was cleared of any and all charges. If I did not have the copy of the bill of sale, and the release of liability, I would have had to pay all the fines, and possibly do jail time. So if I were you, keep a copy.

Now this may be the confusing part. At the end of the trade, you will have the pink slip of the new car, and two bills of sales portions. One bill of sale portion will be the copy you take with you to the DMV, with the pink slip, to verify the seller really did give you that car. The other bill of sale portion is for your records, that you gave the car to the buyer. To better organize them, write in big letters as soon as possible "Keep for Records" on that portion, so you won't get confused later.

The other person may not have brought a bill of sale with them, so it's always best if you bring two.

Now I will show you how to fill out the Bill of Sale (Reg 135). I will use examples (Car A is yours and Car B is theirs) The first thing you may notice is that I did not enter a selling price. For trades, you would usually put "trade" but to save you money (because the DMV charges 10% tax on all trades) just put gift, and no matter the real value of the car, put $500.



Now at the bottom under "seller and buyer" the rest to fill out is pretty self explanatory. Double check to make sure you have filled it all out correctly. Here is a picture in case you need it.


Now you will have to fill out the bottom portion exactly the same at the top, under "cut on line and save for your records." After this is done, you will need to fill out the second bill of sale. All the information will be basically the same, just switched around a bit. (see below)
























I hope you understood all that I have shown you. Its a little confusing at first, but when you've been doing it as long as I have, you get pretty used to it.

If you still have trouble, check out the Contact Us page and send a message our way.

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