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Miscellaneous Vehicle Disposal Matters

Below, you will find a checklist of things that may need to be done when a vehicle changes hands. We suggest that you print this out and check off each item as you get it done.

Registration and insurance matters:

• Cancel or transfer your registration from your former vehicle to your new one. If your license plates are non-transferable and you are required to turn them into your state's department of motor vehicles, do so.
• Cancel or transfer all applicable insurance. Be sure to upgrade your insurance coverage on your new vehicle if it is worth more money, or if you are required to do so by an agreement with your lender.
• If you are buying a heavy truck or vehicle used to transport passengers for a fee, check if there are any special license restrictions required to drive your new vehicle (for example gross weight/special chauffeur's licenses, etc.)

Recordkeeping matters:

• Put all paperwork related to the vehicle's disposal — including this checklist — in a file for future reference. It is a good idea to record some basic information about the vehicle and the party to whom you have transferred it. Why? You could be sent a recall notice from the vehicle's manufacturer that you would want to forward to the new owner. Or a future owner could contact you to ask the mileage at the time of sale if he or she suspects that someone has tampered with the vehicle's odometer. Here's a form you can use to record some important information:

Budgeting matters:

• If you have sold your vehicle yourself rather than trading or scrapping it, consider establishing a financial contingency in your budget. In some states, when you sell a vehicle, you may be responsible for guaranteeing that the vehicle passes certain emissions and safety tests, or must warranty the engine and power train for a certain period of time. You should consider establishing a contingency fund to cover the costs of any repairs for which you could be held responsible. A good rule of thumb is to reserve about 25 percent of the estimated cost of these repairs out of sale proceeds.
• Incorporate tax consequences of the sale into your budget.
• Revise your budget data to reflect changes in your vehicle expenses.

Miscellaneous matters:

• Remove any lettering about your business from the vehicle before it leaves your hands. Otherwise a new owner could end up giving your business a bad reputation when he cuts off another vehicle in traffic. Worse, someone else could use your former vehicle to engage in criminal activity.