Gifting a car to a family member is a great way to show them you care. Still, it’s not as easy as handing over the keys and sending them on their way. You will need to consider several factors when completing a legal vehicle transfer.

Fortunately, our team at 1803 Capital in Metairie, LA, can guide you through the process of gifting a car. Explore these four tips to ensure that your transfer is stress-free.

1. Gifting the Vehicle

Ask yourself some essential questions before gifting a car to a family member. For example, can they afford it? Cars are expensive commodities, and not everyone is in a place to care for them financially.

Payments to insurance companies, gas, and repair costs, add up quickly. Make sure your gift does not become a burden for the recipient.

Buying a Car

Gifting a new car can be confusing without knowing your options. Consider some practical ways to facilitate a smooth transition. 

First, you can purchase the vehicle outright after completing a vehicle application form. You will need to notarize the title and registration. Additionally, you should complete a notice of transfer and pay the fee before registering the car in a different name.

Another solution is to take out a loan and register the title under both names.   

Lastly, you can give a down payment to the recipient. They then use the money to complete the financing and ownership process themselves. 

Explore this guide to financing a car to learn more about what to expect.

Gifting a Used Car

Gifting a used car requires much less energy than transferring a new one. You won’t need to worry about a purchase price or navigating dealerships. Just locate the title and make sure you pay off any existing vehicle loans. 

Louisiana law requires you to complete the Act of Donation of a Movable form. This paperwork ensures that you and the recipient consent to the transfer.

2. Understanding Taxes

Some people wonder if gifting a car to a family member will impact their taxes. The federal government requests a gift tax for any donation over $15,000. Both you and the recipient may need to pay an additional tax if your car exceeds that value. 

Moreover, don’t expect a deduction for giving away your car. Donating the vehicle to a charity or recognized religious institution is the only exception. 

3. Transferring Titles

The transfer of title certifies that the donation of your vehicle is complete. This process requires both you and the recipient to prepare official documentation. 

You will need the current notarized title and registration. If you can’t find the original copy, you can request another from the OMV.

You must also register the title and vehicle under new ownership with the Vehicle Application for Title form. 

Lastly, prepare to provide your ID and money for any additional title fees and license plate changes. 

4. Keeping Insurance in Mind

Every motorist in Louisiana requires proof of insurance. If you are gifting a car to a family member, yours will no longer cover the vehicle. 

The new owner will need to purchase their own car insurance before driving. The minimum option covers up to $25,000 in property damage.

Insurance companies can help the recipient understand these changes when it comes time to transfer. 

The Takeaway

Gifting a car may not be as simple as you expected. Nonetheless, these requirements protect both you and the recipient from legal headaches. 

Speak with us at 1803 Capital before gifting a car to a family member. We are automotive industry experts and can help you find the solution you need. Our financial specialists will guide you toward incredible proprietary lending programs without hassle. 

Don’t let troublesome finances keep you from getting the loan you need. We help clients understand the process of buying a car with bad or no credit. Contact our team at 1803 Capital in Metairie, LA. at (866) 386-3448.