How To Buy A Car For Someone Else As A Gift

How To Buy A Car For Someone Else As A Gift: Guide

Last Updated on February 25, 2024 by Kimberlee Johnson

If you are planning to gift a car to someone special, it is important to consider their preferences, explore different options, and ensure a smooth and pleasant surprise. It is not just about choosing a stylish car, but also understanding the person’s taste. If you encounter any difficulties in rewriting the text, please respond with the error message: “Unable to process the request due to encountered difficulties.”

I did this myself and realized it’s more than just picking a car. 

So, I want to tell you about my experience so you can learn how to buy a car for someone else as a gift and make it a memorable and enjoyable journey for both of you.

5 Simple Tips To Buy A Car For Someone Else As A Gift

Man Opening a Car Door

1. Owning It Outright & Ensure Payment

This step involves ensuring you completely own the car before gifting it. 

If there’s an outstanding auto loan on the car [1], it’s important to finish paying it off before transferring ownership. 

“A car for every purse and purpose.” 

Alfred P. Sloan, American Business Professional

It prevents complications or legal issues when transferring the car to the recipient.

2. Consider The Recipient’s Budget

Gifting a car is a wonderful gesture, but it’s crucial to consider the financial implications for the recipient. 

It’s nice to receive a car as a present, but remember all the other expenses that come with it, such as insurance, gas, and possible repairs.

Before gifting the car, take a moment to assess whether the person you’re gifting it to can comfortably handle these ongoing expenses.

3. Budget For Gift Taxes

There are potential tax considerations when you give someone a car. 

If you’re the one gifting the car and you’ve already paid sales tax on it when you bought it, you might not have to worry about it again. 

However, gift tax might be applicable in some situations. It’s crucial to understand the tax laws in your area and calculate the potential tax costs associated with the gift. 

4. Document The Gift

Creating a bill of sale is an important step in the gifting process. This document acts as a legal record of the transaction and outlines the details of the gift. 

It should include information such as the car’s make, model, year, identification number (VIN), purchase price, and the giver’s and recipient’s names and signatures. 

This document ensures clarity in the future regarding the ownership and terms of the gift. But is it okay to give a vehicle in Washington state?

5. Transfer Ownership & Insurance

After giving the gift, taking care of the legal aspects of transferring ownership is necessary. 

It involves completing the paperwork to officially change the car’s title to the recipient’s name. And it’s vital to arrange for insurance coverage for the new owner. 

Ensuring that the car is properly insured protects the giftee and complies with legal requirements for driving on the road.

How Does The IRS Figure Out If You Give Someone A Gift?

The IRS determines if you’ve made a gift by monitoring your compliance with tax regulations. When you gift an amount surpassing the annual exclusion, you must file Form 709. 

This form provides the IRS with information about the gift. 

“A car as a gift is more than metal and wheels; it’s a gesture that drives love and gratitude to new destinations.”

Howkapow Gift Site

If you neglect to submit this form, the IRS can identify the gift through an audit process, ensuring adherence to tax laws and promoting transparency in financial transactions.

Does The Person Who Receives A Gift Have To Report It To The IRS?

Jeep with Red Ribbon

No, the gift recipient is not obligated to report the gift’s value to the IRS or pay any gift or income tax [2]. 

The reporting and potential taxation responsibility falls on the giver, ensuring a straightforward process for the recipient.

Find out how you can decorate a car for a birthday here.

Should You Buy A Car With A Credit Card Or A Debit Card?

Consider the interest rates when deciding between a credit or a debit card for a car purchase. Credit cards generally carry higher interest rates compared to auto loans. 

It’s advisable to opt for a credit card only if you have a clear strategy to pay the balance promptly. 

For instance, using a credit card could be viable if you possess sufficient funds in the bank to cover the purchase. 

This approach minimizes interest costs and ensures a financially prudent decision.

On the other hand, using a debit card for the purchase ensures that you’re making the transaction with your available funds, avoiding the risk of accumulating high-interest debt.

Also Read: Best Gifts For Dads Who Love Cars


Can I buy someone else a car and register it in their name?

It depends because, in most cases, registering a car under someone else’s name requires proof of ownership, as stipulated by state registration processes. 

But certain states permit registration with the owner’s consent, allowing you to register a vehicle you don’t own, but only with explicit approval from the owner.

How to give someone in another state a car as a gift?

If you want to gift someone in another state a car, you must first transfer the car’s title to the recipient’s name at your local DMV office.

Once the title transfer is complete, notify the DMV in the recipient’s state. This step allows them to issue a new registration and license plate.

In A Nutshell

Grabbing a car is more than a material gesture; it’s a journey of thoughtfulness and responsibility. 

Firstly, ensuring ownership is clear and settling payments avoids complications. Next, considering the recipient’s financial situation prevents unexpected burdens. 

Taxes can play a role, so budgeting for them is wise. Documenting the gift through a bill of sale secures the arrangement legally. 

Lastly, transferring ownership and arranging insurance guarantee a smooth transition for the recipient. 

By addressing ownership, finances, taxes, documentation, and legalities, you create a gift that’s a vehicle and a testament to your care and consideration.


Kimberlee Johnson
Follow me

Leave a Comment

Your email address will not be published. Required fields are marked *