What happens when you sell your car?

You don’t transfer insurance. There should be a place on the title for the seller and the buyer to both sign and date. If you are selling, make sure to get notorized copies of the title after signing. That way if the buyer does not register it in their name you have some evidence that it is no longer yours. This helps if they get lots of tickets or in an accident.

The buyer of the car then goes down to the DMV and registers the car in their name.

You need to turn your tags into the DMV as well. I dont know about other states but at least in NJ you cant drop your insurance on a vehicle until you turn the tags in.

Make sure to call your own insurance agent or company – after the sale is complete; better to be a day or a week late than two minutes too early here – and tell them to cancel your insurance. If it’s not at a renewal period, then you’ll get a rebate for the unused portion of the cancelled time that has already been paid for.

Turning in the tags to DMV is common, but I’m not sure that it’s universal.

If you own the car outright, then you’ll have to transfer title, too. If you have a lien (loan) outstanding then you’ll have to be sure that that is paid off.

Typically, what kicks off the whole process is that you and the buyer reach an agreement about price, then you fill out and sign the “transfer ownership” section on the back of your registration and title documents (at least every place I’ve ever registered a vehicle). That takes care of shifting the “registration” out of your name – the buyer has to register the vehicle himself now, and you need to be sure that liens are paid off and insurance is cancelled. (The buyer should optimally have his own insurance prior to picking up the vehicle and driving away; you don’t want him driving away on your insurance unless he’s someone personally known to you – and trusted.)

Your state’s driver license instruction manual or DMV website will have all of this information. Your insurer or lien holder could also help you out, and they want you to get this right because they don’t want to be involved in a messy case where they might have some liability or a busted asset that can’t be collected upon.

It varies.

In NH, the seller keeps the plates while in WA the tags and tabs stay with the car and the seller has five days to file a notice of sale with the state. That also means that in NH, it is wise for the seller to make two copies of the Bill of Sale and keep one as they would otherwise be held responsible for anything the buyer does with that car until it is re-registered under a different name; a problem that WA doesn’t have.

WA requires all vehicles sold to have a title that the buyer signs over to the seller; in NH, a title is not required to sell any vehicle over 15 years old. In NH, the annual safety inspection expires immediately, requiring the buyer to get it re-inspected (for $35–40) before they can register the vehicle, while in WA the bi-annual emissions test is still valid until 24 months after the previous test. In both cases, the buyer needs to get a new title though.

In both states, the registration expires immediately upon selling the car as that is tied to a specific person and specific car; the buyer needs to register it in their name. NH requires the seller to have plates for the car, though they do issue temporary tags for a nominal fee that allow you to drive the car for 10 days. Handy if you buy a car that you don’t intend to register for a while, like a “project car” or “fixer upper”. WA allows the buyer to drive the vehicle unregistered for five days; a reasonable period of time to get to the registration office even if it’s a holiday weekend but no longer than that.

Insurance does not transfer either, nor can it be transferred. Like the registration, it is tied to a certain combination of owner and VIN; change owners or cars and the policy is no longer valid and thus expires. Of course, if something happens between the time that you sell the car and the insurance company is notified of that sale, you will have a problem. Another reason for a smart seller to have two copies of the Bill of Sale ;) Then again, in NH, car insurance is not required by the state unless you have an SR-22 while most states require proof of insurance to register a vehicle regardless.

Of course other states have other rules, so it’s best to research how your state does things.