How to Buy a Car as a Gift: What is the Proper Process?

There are plenty of reasons for gifting a vehicle to someone you know and love. Perhaps you have a new driver or recent high school graduate in the house, or you want to give it to a friend who needs a better method of transportation.

Whether you're planning on buying a new car or handing over your old one, understanding how to gift a car (including the proper process and paperwork) is an important step. Here are the best ways to buy or give a car as a gift.

How to Give A Pre-Owned Car as a Gift

Gifting your old car is a very generous gesture, but don’t forget that you'll need to take certain steps to ensure it's properly transferred to the new owner. This is for both your protection and for the future protection of the new owner, should they ever decide to sell the car.

The transferring process varies from state to state, but here are the general guidelines.

• Make an agreement with the recipient: Discuss the terms of your gift. Determine the responsibility for ongoing expenses like insurance, repairs and maintenance. This is especially true if you're gifting to a family member. Remember, even though the vehicle is a gift, you may need to write a ‘‘bill of sale” in order to complete the next step.

• Transfer the title: Until the title is transferred to the new owner, you're still responsible for any costs – for example, parking tickets or excise taxes.

• Pay the title transfer fee and applicable sales taxes: While you're at the DMV transferring title, the clerk will inform you of any fees and sales taxes that need to be paid before the transfer is official. Some recipients may be exempt from sales taxes, so make sure to check with your state's DMV.

How to Buy a Car as a Gift

Buying a new car as a gift isn't as simple as heading to the dealership, signing on the dotted line, and slapping a big bow on the roof. You'll need to do a little planning and leave yourself plenty of time if you're planning on giving it on a specific day. Here are some considerations before your write a check.

• Make sure it's the right car: Surprising someone with a car can be very fun and exciting, but only if the car meets their needs. Giving a car that is too big or a gas-guzzler can be a burden rather than a “gift.” Find a clever way to get them to share their car preferences. For example, you could say, “My mom is thinking about getting a new car, what kind do you think she should get?”

• Will you be financing? If you're giving the car to your spouse, you both may need to be listed on the financing documents. Don't worry, caring and cooperative dealers like Homer Skelton Ford will work with you to help you carry out your surprise.

• Consider registration and title documents: Like financing, you'll want to consider how you'll register and title a gifted vehicle. If you're gifting to a family member you'll probably want to register it in their name. You may need to return to the dealership to complete the paperwork.

• Order it in advance: If you're ordering a specific car for your loved one instead of buying one off the lot, make sure to do it well in advance. Check with your local car dealership to make sure it will be there by a specific date!

Gifting a vehicle can be an unforgettable and rewarding experience if done correctly. To ensure everything goes smoothly, give yourself plenty of time to handle the process and paperwork properly. Your loved one will certainly appreciate all the effort you went through to put those car keys in their hands!