How to Write a Bill of Sale for a Used Car

If you've ever bought or sold a car, you've likely heard the term "bill of sale." It's a key document used in vehicle sales. But what exactly is it, and how can you get one in Ontario? 

 

What is a car bill of sale?

A bill of sale for a car is a legally required document in Ontario, necessary for both buying and selling vehicles. This document proves that a car transaction has legally taken place. 

There's no standard format for a bill of sale for a car in Ontario. You can write the bill of sale by hand or type it on your computer and print it out. Although it is a legal document, it doesn't need to be overly formal. As long as it includes all the necessary information, it will be accepted as proof of ownership transfer.

 

Why do you need a car bill of sale?

Besides being a legal obligation, there are three key reasons why a bill of sale holds significant importance:

 

1. Registration requirement

In Ontario, when purchasing a used vehicle, it must be registered within six days of the sale, and a completed bill of sale is necessary for registration.

 

2. Proof of ownership

A completed bill of sale grants the new owner legal rights to the vehicle, serving as crucial proof of ownership.

 

3. Tax implications

The bill of sale details the purchase price of the vehicle. For pre-owned vehicles, this price determines the amount of sales tax the buyer must pay upon registration. The tax is calculated based on either the purchase price or the vehicle’s wholesale value, whichever is higher.

 

What to include in a car bill of sale?

A bill of sale is simple to create as long as it contains the required information. 

Here are the items you need to include in a bill of sale:

 

1. Vehicle Identification Number

Each vehicle is assigned a unique Vehicle Identification Number (VIN). You can locate the VIN on the lower right corner of the dashboard, on the inside frame of the driver's side door, and on the vehicle's registration documents. Both the buyer and seller should verify that the VIN on the bill of sale matches the VIN on the car and on the vehicle permit exactly.

 

2. Vehicle details

The bill of sale must include details such as the car's make, model, year, body type, color, engine type (gas, diesel, hybrid, or electric), and the odometer reading (mileage) at the time of purchase.

 

3. Purchase date

The date of purchase stated on the bill of sale is critical for determining the registration deadline for the vehicle. Failure to register the vehicle within this timeframe could lead to penalties and fines.

 

4. Purchase price

The purchase listed on the bill of sale is crucial for tax purposes. In Ontario, the Ministry of Transportation mandates a 13% tax on vehicle purchases, calculated using either the purchase price or wholesale value, whichever is greater.

 

5. Seller details

The bill of sale must contain the seller's full name, address, phone number, and signature. These details are essential for transferring ownership of the vehicle from the seller to the buyer.

 

6. Buyer details

To finalize the bill of sale, the seller should collect the buyer's full name, address, phone number, and signature.

 

Should you buy a vehicle from a private seller or a car dealership? 

Before buying a car from a private seller in Canada, it's important for buyers to understand the specific process and paperwork needed in their province or territory.

For instance, in Ontario, a private sale typically requires a bill of sale, vehicle permit, Used Vehicle Information Package (UVIP), and a Safety Standards Certificate (SSC). Buyers should ensure they request all necessary documents, as the seller may not be aware of the requirements.

On the contrary, when purchasing a used or certified pre-owned vehicle from a registered dealership, the dealer handles all the paperwork and may even take care of vehicle registration for you. 

Generally, buying from a private seller is usually cheaper but requires more effort from the buyer, while buying from a dealership is more convenient but often comes at a higher cost.

 

Read: Pros and Cons of Buying from a Car Dealership vs. a Private Seller

 

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