How To Gift A Car

There are many different types of gifts you can give. You can give stoner gifts to your favorite pothead. You can give Rick and Morty gifts to your favorite squancher. You can even give gifts to your pets for Christmas. As awesome as those gifts are, few will ever be as memorable (or useful) as a car.

Everybody has, at one point or another, fantasized about being given a car. However, few people can actually say they've been the recipients of such a gift. If you want to be the one to give a car as a gift, be forewarned—it's not that easy.

Here's how to gift a car the right way, and how to make sure that it goes over well.

First, figure out what car the person would like and if it's a wise decision.

Before you learn how to gift a car, you're going to have to figure out if gifting a car is a good idea. Some people should not be given cars, simply because they can't afford them. Others don't have a license, or worse, tend to get into accidents when they are behind the wheel.

If you think it's a good idea to gift a car, make sure it's a car they like. There's no point in offering them a white elephant gift—and if that "elephant" is a car, it can turn into more of a burden than anything else.

Before you gift the car, negotiate about the car first.

This may seem contrary to what gifting is, but it's a worthwhile endeavor. You need to figure out who will be paying the title transfer fees, who will be getting the insurance, and also who will be paying all the little expenses that come with car ownership.

If they wouldn't even pay for an oil change, you might want to gift that car to someone else. It may not be a wise choice to gift a car to a person who won't pitch in when it comes to maintaining it.

By negotiating about the car, you ensure that you don't get ugly surprises or end up gifting a car to a person who isn't pleased about it. Make sure to get it in writing, just to be on the safe side.

One thing most people won't tell you about learning how to gift a car is all the "misunderstandings" that happen with gifted cars. By having it in writing, you reduce the chances of making this gift turn into a massive reret.

If negotiations go well and you feel comfortable with the terms, buy the car.

It doesn't matter how you buy the car. It can be from a private owner, a dealership, or even a car auction. The important thing to remember is that you will have to get the paperwork, the valuation, and the insurance to drive away with it.

Once you buy the car, it's time to figure out how to gift a car in your state.

Read up on tax issues and local laws.

Just because the recipient isn't paying a dime for the car doesn't mean that there aren't taxes and fees that you won't have to take care of. Part of learning how to gift a car is reading up on all the paperwork, fees, and tax-related stuff you will have to do.

Each state will have their own tax issues that you will have to sort out, and many will also have specialized transfer fees. At dealerships, salesmen may be willing to explain things to you.

Transfer the title over to the gift recipient.

Regardless of where you gift your car, part of knowing how to gift a car is knowing how to transfer the title over. In order for a car to be gifted, it cannot have any liens on it. If you have a lien on it, you'll need to clear those off before you can gift it.

To transfer over a title, you will have to fill out the transfer portion of the title. When you transfer over the rights to the recipient, you need to make sure that you...

• Print the miles on the title transfer section
• Write the word "GIFT" in the amount box for sale price
• Correctly fill out all the fields

Some states also will have a separate gifting form that you will need to fill out. You might want to check out DMV.org to find out more about title transfers and the paperwork involved, just to stay on the safe side.

File the transfer paperwork.

The hardest part of knowing how to gift a car is done with, after you've written down all the bits on the title. To do this step, you will need to go to the DMV with the person that you're gifting the car to and file the paperwork.

For some folks, the hardest part of this process could be waiting in line for hours at the DMV. We can't hate on that.

Call up the insurance agency and transfer the name to the new owner.

Once you have transferred the title, it's time to give the agency that deals with your car insurance a call. Tell them that there is a new owner to the car, and they will transfer ownership to that individual. If your recipient hasn't got car insurance yet, make sure they get some at this point.

Really, we can't emphasize how important it is to remember this step. Forgetting the insurance transfer can cost a lot of money in both traffic tickets as well as insurance premiums.

Most states, if not all, will require the car owner to have car insurance in order for you to drive. If you keep your insurance on the car and the new owner crashes it, it's possible that you will be the one liable for damages.

Fill out a Statement of Facts if necessary.

A lot of the guides that talk about how to gift a car omit this step, but it's important. In certain states, a Statement of Facts form needs to be filled out by the recipient in order to ensure that they don't have to pay double interest.

Pay the title fees and taxes, too.

Part of the entire process of gifting a car is paying taxes and transfer fees on the title transfer. This is done during the time that you file everything at the DMV.

Each state has different fees and taxes. Some are based on market value of the car, others will just be a flat rate. It's up to you to read up on what to expect before you file the car title paperwork.

If you're looking for a tax deduction due to it being a charitable gift, you might also want to look into what the Internal Revenue Service says to do. Donating a car is slightly different than gifting in some states, so you might have a couple of extra steps to do.

Get receipts for the title transfer from the DMV.

Once the fee is paid, it's official. You've gifted the car. The car title is not in your name anymore.

Should a glitch happen in the system, a receipt from the transfer could be a world of help. While this isn't a "mandatory" part of any guide telling people how to gift a car, it's still worth noting. We suggest keeping the receipt in a file cabinet along with other important documents.