The Ultimate Guide To Selling a Car in Texas


No matter your reasoning, selling a car in Texas will come with many things to consider. There is paperwork and processes that you’ll need to make sure is in order. This can mean everything from titles to auto insurance and more. Due diligence is always essential whether you are buying or selling a vehicle. If you’re in the process, no matter which party you represent, here are some crucial points you’ll want to mull over before completing the transaction.

How To Sell a Car in Texas

Whether you are buying or selling a vehicle in Texas, there are some steps that you’ll want to take throughout the process. When done correctly, selling a car in Texas can be a seamless transaction leaving both parties satisfied. Here’s what you need to know:

  • All vehicles will need to have a title in the name of the buyer within 30 days of the sale date. If this doesn’t happen, tickets, violations, and crimes involving the vehicle could remain the seller’s responsibility.
  • For this reason, as a seller, you’ll want to go with the buyer to your county tax office to see to it that this step is completed.
  • If you trade in or sell your vehicle to a licensed motor vehicle dealer, the dealer is not required to title the vehicle in the dealer’s name. Because the vehicle will be in the seller’s name until it’s sold to an individual, you’ll want to file a Vehicle Transfer Notification within 30 days from the sale date to avoid being responsible for tickets and violations.
  • Should you still receive tickets and tolls after submitting your Vehicle Transfer Notification, contact the department for a confirmation email or submit a Request for Texas Motor Vehicle Information (Form VTR-275). You’ll need to show the month and year that the vehicle is transferred.

Sellers also have a responsibility to provide those buying a car from a private seller in Texas with important documents, including:

  • A title that is signed and includes the date of sale and the vehicle’s odometer reading.
  • A signed Application for Texas Title and/or Registration (Form 130-U) with the sales price clearly displayed.
  • When you sell a car in Texas, the seller should keep detailed written records of the transaction. Things such as the buyer’s contact information, facts about the vehicle, the sale date, and the Vehicle Identification Number (VIN) should be recorded.

Vehicle plates and registration stickers can be removed by the seller. License plates can be removed in three ways:

  1. If the vehicle classification is the same as the one being purchased, the seller may transfer their license plates.
  2. The seller is permitted to keep the license plates for future transfer, but they are not entitled to keep the registration stickers.
  3. During a sale when license plates are not transferred or kept, the plates must be defaced with permanent black ink or another method to prevent fraudulent use.

Ultimately, due diligence is what to do when selling a car in Texas, and also if you are buying a vehicle. This will allow you to conduct business with the full knowledge of the other party, the regulations in place, and the process at hand.

In addition to the necessary steps for selling a car in Texas, you should be aware of how to handle the cancelation or transfer of auto insurance during the process.

When handled correctly, you might even save money. Going about this the wrong way, however, can create lapses in coverage and leave you vulnerable to significant financial losses that may even cost you the transaction altogether.


When To Cancel Insurance After Selling a Car

A key consideration when selling a car in Texas is dealing with your auto insurance policy. There are a lot of things that need to be put into place and if handled wrong, it could end up costing you serious money.

First and foremost, you’re going to want to speak with your insurance agent beforehand to keep your carrier informed. From here, your agent will be able to help you make the best viable choices to smoothly complete the transaction.

If you are selling a vehicle that is still in your household, such as when you sell to a family member, you’ll want to avoid canceling coverage in many cases. Transferring coverage is a much more viable option, although you should expect your premium to change.

The same goes for drivers who are selling their vehicles and purchasing another one. Transferring is a much cheaper and quicker option than canceling your policy and having to purchase a new one in most cases. This can also help you avoid any lapses in coverage and maintain the minimum coverage requirements that you’ll need when purchasing another vehicle.

Additionally, if you cancel your coverage before the completion of the sale, you could run into trouble. Before the deal is done, you’ll be responsible for the damage to the vehicle without the right policies in place. This could derail the deal and leave you with costly damages should something happen before it’s finished.

The overarching theme here is that timing and method of canceling or transferring your coverage are key. This way, you’re still protected and the entire transaction can be completed without a hitch.

There are grace periods that can last between a week and a month; however, drivers should be aware of the following:

  • The time of your grace period will vary from carrier to carrier.
  • Some carriers may not even offer a grace period for your auto insurance.
  • Even when dealing with car insurance companies that offer grace periods, they can be a bit trickier to contend with and lead you to complex situations should an accident occur.
  • Avoiding a lapse in coverage is key not only for your protection but also for keeping your auto insurance premiums lower and qualifying for more discounts.

Any way you look at it, your best course of action when selling a car in Texas is to be sure that your coverage is properly handled through official channels. This means staying in communication with your agent, auditing your personal situation, and following the appropriate steps to maintain your coverage.


Gifting a Car vs Selling for $1 in Texas

If you’re looking to avoid taxes, it’s an understandable feeling, but selling your vehicle for $1 isn’t going to get the job done. Unfortunately, the gift tax for automobiles in the Lone Star State is a bit more complex than that.

The entirety of the motor vehicle tax guide can be viewed online courtesy of the Texas Comptroller. This includes any necessary forms, descriptions of who qualifies for gift transfers, and more.

Do note, however, that a $10 tax is required for all motor vehicle gifts. This must be paid to the person receiving the vehicle and it must be paid when the vehicle is titled and registered to the county tax assessor-collector (CTAC).


Can I Sell a Car in Texas With Expired Registration?

Yes, it may be possible to sell a car in Texas with an expired registration, but here’s why you should avoid it altogether:

  1. You could end up putting off potential buyers.
  2. The process can be more complex and involve additional fees.
  3. To remain legal in Texas, you must have a valid registration while on the road.

Your best bet is to make sure everything is in order before the sale. This includes having a valid registration for the vehicle you are selling.


Can You Sell a Car Without a Title in Texas?

No, when selling a vehicle in Texas, it’s illegal to do so without a title. Having a title for the vehicle being sold helps legitimatize the transaction, and makes it harder for criminals to rip people off either through theft or sketchy sales. In the event that you have bought a vehicle with no title, the TxDMV can help you get things back on track.


Can a Private Seller Repo a Car in Texas?

Although less common, it’s possible for a private seller to repo a vehicle, depending on the situation:

  • If the vehicle has been purchased in full, then it cannot be repossessed.
  • If the vehicle has been purchased with payments and the payments aren’t current, the seller can put a lien against the vehicle. In this case, the car can be repossessed.

For anyone purchasing a vehicle, the best way to avoid this situation is to simply make your payments on time. It’s also worth noting that while it can be a hassle, there are many legal repercussions that should be considered.

Small claims court is a viable option for disputes $10,000 and under in the state of Texas. Still, this is not a legal website. For any and all legal decisions, you should speak with your lawyer to verify the best course of action for your situation.


Can I Keep My Insurance if I Sell My Car?


If you wish to keep your auto insurance after selling your car in Texas, you can. However, you’ll need to contact your car insurance provider and make the necessary changes to your policy as a result of the sale.

This is because each vehicle is going to be insured at a different premium rate and adjustments will need to be made.

Drivers can transfer their coverage to a new vehicle if they are selling their current one and purchasing another car but will need to provide the appropriate information such as the VIN, make, model, and more, surrounding their new vehicle.

In the event that you’ve sold your vehicle but aren’t purchasing a new one quite yet, getting a non-owner policy is a great idea. You’ll receive coverage while you drive both rentals or borrowed vehicles in the meantime, all while avoiding a lapse in coverage.

For any driver selling their vehicle, it’s often a great time to revisit your auto insurance coverage as changes will likely become necessary in the first place. Our team at Freedom Insurance Group is here to help.

By assessing your coverage needs, you can not only gain the right level of coverage for your new situation, but you can also save a significant amount of money in the process.

Because our agents work with over 25 top-rated insurance carriers available to drivers throughout the Lone Star State, we can compare your rates among the best auto insurance coverage options in the state.

This allows our agents to find you the exact coverage you need at the lowest possible price. Our partnerships allow us to work with you the client and find deals that work best for your needs rather than a single brand. This is why our average client saves 40% when switching.

No matter what level of protection you need after selling a car in Texas, we’re here to help. Contact our agents today or get a free auto insurance quote online today.

Contact Us

Freedom Insurance Group
3861 Long Prairie Rd Ste 110
Flower Mound, TX 75028
Phone: (972) 798-3769


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