Buyers & Sellers Guide to Vehicle Purchase Agreement

Date: 07 February 2022

Reading Time: 5 minutes

Buyers & Sellers Guide to Vehicle Purchase Agreement

Buying and selling a used car can be a headache. There are many things to consider and it can be hard to find all the information you need in one place.

And the most stressful part of it, whether you're the seller or the buyer, is the vehicle purchase agreement.

We've put together this guide to simplify car purchase agreements and help you stay protected when purchasing vehicles or selling them.

Our guide will help you understand your rights as a buyer and seller so that both parties can have a pleasant experience with no surprises along the way.

Here is what you’ll learn reading this guide:

Let's get started..

What Is a Vehicle Purchase Agreement?

The Vehicle purchase agreement is a contract between two parties: the seller and buyer. It details the sale of a vehicle including parties and vehicle information, alongside the payment terms.

The vehicle purchase agreement is also referred to as a car purchase contract. The contract generally consists of the following data:

  • Full name of included parties (Seller, buyer, co owner)
  • Birth date
  • Sales price
  • Vehicle condition
  • Total purchase price
  • Type

The document also details what the responsibilities of each party are in regards to selling or buying a used vehicle.

Alongside the car inspection, the purchase agreement is another way to protect both the seller and buyer.

Sometimes the vehicle purchase agreement is referred to as the sales contract or sales agreement.

When it comes down to the car purchase agreement, there are several things you'll need to pay extra attention to before signing on the dotted line:

  • Mileage
  • Condition of the vehicle
  • Total sale price
  • Payment terms

We'll cover these in-depth in the next sections.

This agreement is not only for buying or selling cars but for any motor vehicle.

What Is Included in a Typical Vehicle Purchase Agreement?

There are many terms that can be included in a car purchase agreement. However, there are four main components you'll find in most agreements:

Buyer and seller personal details:

This includes the names, addresses, and phone numbers of both parties.

Vehicle information:

This includes the year, make model, and vehicle identification number (VIN). It also needs to have a description of the car's condition, for example, if there is any damage or not.

The VIN number is the most important as it’s one of the few specific identification factors of a car.

By including the VIN number you know exactly which car is being sold, whether it's a new car or an old one.

It is also possible for the buyer to check the VIN number in the national registries or with the police to ensure that the car has not been stolen.

If you’re the buyer, make sure that the VIN number in the contract matches the information in the registration papers and/or on the actual car.

The VIN number can usually be found on the front window or on the side of the driver's door.

Include VIN in vehicle purchase agreement

Conditions of vehicle:

This section outlines what condition the vehicle is currently in – whether it's new or used, missing parts, etc.

You'll be able to negotiate this with your partner before signing on the dotted line so they agree on the total amount and the given state.

If the car is advertised for $3000, and as a buyer, you say "The AC is not working, based on that I'm willing to pay $2500" and the advertiser agrees, then you can add this to the contract too.

You will have to change the overall sales price field and add in the field called "other provisions" that you have been given a discount due to a faulty AC.

This is crucial and it's important to both the buyer and seller. There are certain parts of a vehicle that may need repair or replacement, such as brakes, shocks, etc.

Price and Payment Terms:

This section of the contract will outline how much money needs to be exchanged between the buyer and the seller for the vehicle.

It should also include which payment method you have agreed upon, for example, cash or financing, along with any discounts offered by the seller.

Finally, it’s good to agree on and document which amount of money should be paid when.

For security, it might be wise to split the payment into two installations, where the buyer pays a part of the purchase sum at the time of contract signing (down payment), and the rest once he/she has received the vehicle.

Another part that concerns the price and payment terms is the car sales tax. There's no fixed sales tax worldwide, it differs from one country to another.

Who is responsible for this tax? That depends on the tax authorities of your country.

In Europe for instance, if you buy a vehicle from car dealers you as a buyer must pay the VAT sale tax. However, for private party sales, there is no VAT tax to pay.

So what we recommend is to consult with your tax authorities in advance to be well informed before you dive deeper into the transaction and feel overwhelmed.

What Are the Seller's Rights and Duties?

The seller is always responsible for informing the buyer about any faults that the seller is aware of.

The seller is also responsible for delivering a car that matches the description given in the agreement.

They must also provide you with all written documentation such as title, service history records (if there are any), receipts, and manuals.

It's important to go over these documents before signing the sales agreement because they may indicate problems or damage not mentioned anywhere else.

In addition to this, it's essential for both parties to be honest about anything related to buying or selling their vehicle – particularly during negotiations leading up to signing an actual sales contract.

This includes disclosing information regarding past accidents, repairs done by yourself, major issues like needing engine work done, etc.

What Are the Buyer's Rights and Duties?

In addition to the duties of a seller, the buyer has their own set of responsibilities. By law, it's essential for buyers to inspect and test drive the vehicle before purchasing it.

Also, it’s the buyer’s duty to make sure that the car has insurance from the take-over date.

The buyer's duty is to make the final payment and make sure it’s received by the seller.

6 Details to Look for in a Car Purchase Agreement Before You Sign

1. Mistakes on your personal information

In general, you want to make sure that each party's personal information is correct before signing on the dotted line.

For example, a mistake could be made in your address or phone number which can cause complications later down the road during communication between both parties and other organizations, such as banks, for financing purposes.

Data entry errors are common, so don't sleep on reviewing every detail on the seller and buyer information.

Therefore, it's essential to take into consideration anything related to this portion of an agreement because they may lead up to further issues with receiving documentation from credit companies if there are any mistakes noted here.

Mistakes aren't always going to happen, but don't sign off until everything matches what was previously agreed upon, so all problems can be avoided in advance as making changes afterward will result in them needing approval by everyone involved.

2. Extra fees you

Certain fees apply only when you’re buying a used car from a car dealership. But if you buy from a private seller, there will be no extra fees.

Some used car purchase agreements may have fees that you were not made aware of previously which can be a problem down the road because it could cause confusion and frustration from either party involved.

So try your best to avoid this situation as much as possible by reading carefully over everything beforehand instead.

After going through all terms, conditions, and specifications in order to ensure that there aren't any changes being made after reviewing every detail then only sign once everything looks correct without missing anything out at all, or else you'll need approval first before making any additional edits afterward.

If you're a seller, make sure that there are no hidden or questionable fees included on your end because these could lead to major complications down the road if not noted beforehand before signing off any documents.

For example, since taxes will be paid by buyers for their vehicles, make sure that you also include this in your sale price.

3. Charges for agreed-on free items

Another important thing to take into consideration when signing any vehicle purchase agreement is to double check for charges related to items that were previously agreed upon.

For example, if there are no extra fees included in your used vehicle sale price, then you should not expect the buyer to pay anything else either.

This includes agreeing on free services or parts such as inspections or repairs done to your vehicle.

For example, if an inspection is included as a free service for buyers then you should not expect them to pay anything extra because it was already agreed upon by both parties involved without any additional fees being charged afterward.

4. Added options that the buyer did not request

This is more related to buying used cars from car dealerships, but sometimes buyers find added options that they didn't agree on during the negotiation process, which can lead to additional expenses.

Here is a real-life example if you're a seller.

If you wanted to include navigation or a sunroof for your vehicle but the buyer didn't request it to be installed beforehand, and then the buyer wants these options then they must pay extra.

So make sure that you're completely clear with all specifications before agreeing on anything because buyers will try their best to get the best deal possible.

5. The interest rate on your financing

If you're relying on a financing system to buy a used car, when signing a vehicle purchase agreement make sure that the interest rate on your financing is clearly outlined before agreeing to any terms.

This applies if you're getting financing from the same party that you’re buying the car from.

However, it's not needed if you buy a car from a private seller and are getting a car loan from your bank. Because then you sign separate papers with your bank.

This way you don't get hit with extra charges down the road because this was not included in your contract and it can be confusing for either party involved if there are any discrepancies noted somewhere that wasn't discussed beforehand.

In case you're buying from or selling to a car dealer, make sure to discuss and agree on:

  • Purchase price
  • Financing information
  • Payment plan
  • Finance charge
  • Doc fee charges
  • Annual percentage rate
  • Monthly payments when paying in settlements

You might feel overwhelmed by the depth of the process, but financing information brings another layer of details to your vehicle purchase agreements.

6. The amount of your down payment

When you plan on making a down payment for your new vehicle, this should also be included in the agreement.

This means that both parties need to agree beforehand as well as how much money will be put down and when it needs to be received by the seller so there isn't any confusion or problems later on.

Second-hand Private Car Sale Agreement Templates

A second-hand private car sale agreement template is a written legal agreement between the buyer and seller which legally binds them to sell or buy a used vehicle.

So make sure you have a reliable car purchase agreement template that covers every important detail.

You can rely on Swiftcourt’s car sale contract template which is used by over 1 million people to legally secure their rights as buyers and sellers in the private sale of cars.

Sign in to create your car sale contract and:

  • Co-edit the contract online together
  • Sign digitally on your computer or phone and obtain a signing certificate
  • Secure the transaction with a legally binding contract
use digital car purchase agreement

Swiftcourt's vehicle purchase agreement form is a super simplified form to make it easier for car sellers and buyers to protect their trade.

You may wonder, can I write my own vehicle purchase agreement?

If you're a legal expert the answer is yes.

But if you're a private person who just wants to feel protected while buying or selling a motor vehicle, I recommend you to use Swiftcourt's legally binding contract.

We make sure that the sales contract matches to prevent shady practices and protect both buyers and sellers.

This way we prevent any changes that can occur in the pricing information, payment period, trade in value, acquired vehicle details, etc.

What to do Before you Hand Over the Money?

When transferring funds, ensure that you use a trackable method of payment such as bank transfers.

Always avoid selling or buying using cash as it’s hard to trace which makes it the least safe payment method.

We recommend dividing the payment to be paid in installations with a down payment and the rest to be paid as the buyer receives the vehicle to create a sense of security for both parties.

Swiftcourt’s secure payment service is a feature we’re working on to make your used car purchase transaction stress-free by making sure the buyer receives the car and the seller receives his payment.

Please note: It is important to be wary of online sellers and to ensure you research the seller thoroughly.

Ensure the vehicle purchase agreement is signed by both you and the seller and both sales contract matches.

If you’ve followed all these steps and used Swiftcourt’s digital contracts, you should be in a good position when handing over the money.

Ask for a receipt for the money - including any agreement such as work to be carried out before collection as well as the date and the car’s current mileage.

If you feel that the dealership or the vehicle seller is engaging in shady practices, you can take it a step further and consult with a law firm, or simply walk away from the deal.


When you're using Swiftcourt's car sale contract template, it makes the process of buying and selling cars so much easier.

All that needs to be done is sign your name on our online platform and access the simplest form of a vehicle purchase contract.

Then we can help secure and protect both parties involved during the whole car purchase agreement process.

Our digital (legally binding) contract documents the details of the sale and avoids future disagreements caused by misunderstandings or manipulation.

We hope this guide makes your car purchase or sale smooth and easy to understand.

If you need assistance or you have questions regarding car sale contracts, visit our website and write to our support team and happily help you.

Akram Krayem, Swiftcourt

Published by Akram Krayem

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