Selling a car and depositing the proceeds at your bank involves three separate steps: completing the sale, handling the title transfer, and moving the money into your account
The sale itself happens between you and the buyer—you agree on a price, the buyer pays you, and you hand over the keys and title. The deposit is straightforward: you take the payment to your bank and put it in your account. What most people need help with is the middle part: making sure the title transfer is legal, the payment is safe, and you have proof of the sale for tax purposes.
The order matters. You should not hand over the title until you have the full payment in hand, and you should not consider the sale complete until the title is signed over and the buyer has it. Only after that do you deposit your money.
Key Takeaways
- Never hand over the title or keys until you have received full payment—use a cashier's check, bank transfer, or cash counted in front of a witness, not a personal check.
- Sign the title in the presence of the buyer and have them sign it too; the exact process varies by state, so check your state's DMV website before the sale.
- Keep a bill of sale (a simple written record of the date, price, buyer name, and vehicle details) even though it is not required everywhere—it protects you if the buyer later claims you owe them money or if the car is used in a crime.
- Deposit the payment at your bank within a few days; if you receive cash, bring your ID and be prepared to answer questions about the source of the money.
- Notify your insurance company and your state's DMV that you no longer own the car, usually by submitting a release of liability form.
How to receive payment safely
The safest payment method is a cashier's check or a bank transfer (ACH or wire) because the money is may provide and traceable. Ask the buyer to get a cashier's check from their bank before you meet, or ask them to transfer the money to your account while you are both present. If they cannot do either, a wire transfer works but costs them a fee—they initiate it at their bank, and the money lands in your account within one business day.
Cash is the fastest but the riskiest. If you accept cash, count it in front of the buyer and a witness (a friend or family member), and ask the buyer to sign a receipt stating they received the title in exchange for that amount. Never meet alone, never meet at night, and never meet at your home. Use a public place like a bank parking lot or police station parking lot during business hours.
Do not accept a personal check. Personal checks can bounce days or weeks after the sale, and by then the buyer has the title and the car. If the check bounces, you have to pursue them through small claims court to get your money back—and you cannot get the car back because the title is already in their name.
Signing and transferring the title
The title is a legal document that proves you own the car. To transfer it to the buyer, you sign it in the section marked "Seller" or "Previous Owner"—the exact wording varies by state. The buyer signs in the "Buyer" or "New Owner" section. Both signatures must be present on the same document. Some states require the buyer to sign in front of a notary; check your state's DMV website to confirm.
The buyer then takes the signed title to their state's DMV (or equivalent agency) to register the car in their name. You do not go to the DMV for a private sale—the buyer handles the registration. Your job is to sign the title and hand it over.
If you have lost the title, contact your state's DMV and request a duplicate. This takes one to two weeks and costs a small fee (usually $10 to $30). Do not sell the car without the title in hand—a buyer cannot legally register a car without it, and you will be liable if they drive it unregistered.
Creating a bill of sale
A bill of sale is a simple written record of the transaction. It should include the date of sale, the price, your name and address, the buyer's name and address, the vehicle identification number (VIN), the make and model, the mileage, and a line stating "Seller transfers title to Buyer in exchange for [amount]." Both you and the buyer sign and date it. You keep one copy and give one to the buyer.
A bill of sale is not required by law in most states, but it protects you. If the buyer later claims you promised to fix something or that you owe them money, you have written proof of what was actually agreed. If the car is involved in a crime or an accident after the sale, the bill of sale proves you no longer owned it on that date. You can find free templates online by searching "[your state] bill of sale template"—most are one page and take five minutes to fill out.
Depositing the payment at your bank
Take the payment to your bank within a few days of the sale. If you received a cashier's check or personal check, sign the back and bring your ID. The teller will deposit it into your account. Cashier's checks clear within one business day; personal checks take three to five business days, though your bank may make some funds available sooner.
If you received a bank transfer, the money is already in your account—you have nothing to deposit. If you received cash, bring your ID and the cash. Banks are required to report cash deposits over $10,000 to the federal government, but this is routine and not a problem. If your deposit is under $10,000, the bank may still ask where the money came from; answer honestly that it is from a car sale. Bring the bill of sale if you have one—it helps explain the source.
Do not deposit cash in multiple smaller amounts to avoid the $10,000 reporting requirement. This is called structuring, and it is illegal even if the total money is yours. Report it honestly and you have no problem.
Notifying your insurance company and the DMV
Contact your car insurance company and tell them you have sold the car. They will cancel the policy or remove that vehicle from your policy. Do this before or immediately after the sale—if the car is in an accident after you sell it but your insurance is still active, you may be liable.
Most states require you to submit a release of liability form to the DMV to notify them that you no longer own the car. This protects you if the new owner gets a speeding ticket, is in an accident, or commits a traffic violation—the ticket or notice goes to them, not you. You can usually submit this form online through your state's DMV website, by mail, or in person. Do it within a few days of the sale.
What to do if the buyer's check bounces
If a check bounces, contact the buyer immediately and ask them to provide a cashier's check or wire transfer for the full amount plus any bank fees you incurred. If they refuse or you cannot reach them, you have a few options. If you still have the title (because you have not handed it over yet), do not give it to them. If you have already given them the title, you can file a police report for fraud or theft, though police rarely pursue these cases.
Your best option is small claims court. File a claim in the county where the buyer lives for the amount of the bounced check plus court fees. You will need the check itself, the bill of sale, and proof that the check bounced (a letter from your bank). Small claims court handles cases up to a certain amount (usually $5,000 to $25,000, depending on your state) and does not require a lawyer. If you win, the buyer is ordered to pay you, but collecting the judgment is your responsibility—if they do not pay, you may have to pursue wage garnishment or bank levies through the court.
Frequently Asked Questions
Do I have to report the car sale to the IRS?
No. The IRS does not require you to report the sale of a personal vehicle, even if you make a profit. However, if you are a car dealer or regularly buy and sell cars for profit, that income is taxable. Keep your bill of sale and bank records for your own records.
What if the buyer wants to pay me in installments?
Do not hand over the title until you have received the full amount. If you give the title before the final payment, the buyer owns the car legally and you have no leverage to collect the remaining money. If the buyer insists on a payment plan, consider using a promissory note (a written agreement stating the payment schedule and what happens if they miss a payment) and keep the title until the last payment clears.
Can I deposit a check made out to someone else?
No. A check must be made out to you or to you and the buyer jointly. If the buyer writes a check to a different name, ask them to void it and write a new one with your correct name. If the title is in both your names, the check can be made out to both of you, and you both need to sign the back.
What happens if I sell the car but forget to notify the DMV?
If you do not submit a release of liability, you remain the registered owner in the state's records. Any tickets, tolls, or violations the new owner incurs will be sent to you. You can still file the release of liability at any time to clear your name, but do it as soon as you realize the mistake.
Is it safe to meet a stranger to sell my car?
Yes, if you take precautions. Meet during the day in a public place like a bank parking lot or police station. Bring someone with you. Do not give the buyer a test drive alone—ride along or do not sell to them. Count cash in front of a witness. Trust your instincts—if something feels wrong, walk away.