It's important that when you buy or sell a used car you record the sale with an auto bill of sale form. For the person selling the car, it provides them evidence that the title of the car has been legally transferred to the buyer, and they are now responsible for the vehicle. For the person buying the vehicle, it documents the transaction and shows proof of purchase.

In most states an auto bill of sale is required before you can transfer the title and register a vehicle under a new owner. The main reason for this is to check out the sale price for tax assessment but they also check the odometer reading to try and find odometer fraud. According to the National Highway Traffic Safety Association, consumers lose billions of dollars a year from people rolling back the miles on used cars so they can overcharge buyers for them, which is odometer fraud. A vehicle that would normally sell for a couple hundred dollars can have its odometer numbers altered to show lower miles and then be sold for thousands of dollars. The Consumer Federation of America even estimates that 1 in 10 cars have had their odometers altered and rolled back.

Since there is such a problem with fraud, an incomplete bill of sale form or one with incorrect information will in many cases not be accepted, and the vehicle purchased cannot be registered.

Even if your state doesn't require an auto bill of sale form to register a purchased vehicle, creating one for the purchase of a used vehicle is still good to have as a receipt and for your peace of mind. It also makes selling a car more organized and professional, which can help people feel more comfortable about handing over their money. Both parties will also know exactly what terms their agreeing too.

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