In Louisiana, vehicle selling is governed by specific laws outlined in the Louisiana Revised Statutes (LA RS) and the Louisiana Administrative Code (LAC).
Key statutes include LA RS 32:705, which mandates that no person shall sell a vehicle without delivering to the purchaser a certificate of title issued in the seller's name with a signed sale endorsement. Additionally, LAC Title 55 Section III-398 requires the seller to disclose the odometer reading.
Sellers must ensure compliance with these regulations by signing the certificate of title, submitting an odometer disclosure statement, and completing other requirements. The buyer is then responsible for applying for a new title and registration within 40 days.
Legal Requirements Before Selling a Vehicle in Louisiana
Sellers in Louisiana must follow a series of legal steps and requirements outlined by the Office of Motor Vehicles (OMV) of the Louisiana Department of Public Safety (LA DPS) when preparing to sell a vehicle. These steps include:
Duplicating a Title
In Louisiana, individuals must possess the certificate of title for their vehicle to transfer ownership to another person legally. If the title has been lost or damaged, a duplicate must be obtained from the state where the car is titled before proceeding with the transaction.
To request a duplicate Louisiana title, the seller must either be the current registered owner of the vehicle or an authorized representative. They can bring a completed Vehicle Application (Form DPSMV 1799) to the local OMV to initiate the process of obtaining a copy of the vehicle's certificate of title.
It is essential to be aware that obtaining a duplicate title involves fees. In Louisiana, the cost is $18.50, plus an $8 service charge.
Selling a Vehicle in Louisiana with an Out-of-State Title
Selling a vehicle in Louisiana with an out-of-state title is possible, but there are some critical steps to follow.
To transfer ownership rights, the seller must provide a notarized bill of sale and an adequately signed title. In Louisiana, the state often requires that their titles be signed before a notary.
However, if the seller notarizes these documents in Louisiana, the OMV might think they have become a Louisiana resident. This assumption leads to "double transfer" fees, which means paying twice the regular tax on the vehicle.
To avoid this extra cost, the out-of-state seller must provide a notarized affidavit stating that they are not a Louisiana resident and identifying their actual state of legal residency. Military members whose home of record isn't Louisiana also need a similar affidavit.
Getting a Pre-Sale Inspection
All vehicles used on public roads are required to undergo a yearly Louisiana safety inspection. This inspection verifies that cars are in good condition and safe to drive, preventing accidents.
To conduct the safety inspection, sellers can visit any official Louisiana Department of Transportation (DOT) service station, which can be recognized by its signage.
During the safety inspection, several components of the vehicle are examined, including:
- Brake system
- Fuel system
- Exhaust system
- Electrical system
- Lighting system
- Windshield wipers/washing system
- Body and chassis
- Defrost
- Glass and mirrors
- Horn
- Tires
- Steering
- Suspension
- Odometer
- Check for any signs of tampering with the emissions system
For certain parishes such as Ascension, Iberville, East Baton Rouge, Livingston, and West Baton Rouge, a smog check is also part of the inspection. This check confirms that the vehicle complies with emissions regulations.
Having a Vehicle History Report and Other Essential Records
Certain records are essential when selling a vehicle in Louisiana. They provide potential buyers with valuable information and instill confidence in the purchase.
One vital record to have is a vehicle history report. This report contains valuable data about the car, including previous owners, their locations, any accidents or damage it may have experienced, repairs conducted, and manufacturer recalls. Having a vehicle history report can pique the interest of many buyers who want to know the history of their potential purchase.
To obtain a vehicle history report, one can visit the National Motor Vehicle Title Information System (NMVTIS) and enter the vehicle identification number (VIN) to retrieve its history. Note that most vehicle history providers charge a fee for their services.
In addition to the vehicle history report, gathering service and maintenance records is beneficial. These records consist of receipt sets and service summaries demonstrating diligent maintenance and vehicle care. These records can reassure buyers about the vehicle's condition, ultimately increasing its value.
Moreover, obtaining other official driving records from the Louisiana OMV can be helpful. These records can be accessed through OMV's Online Services and provide additional information that potential buyers may find valuable.
Advertising the Vehicle
In Louisiana, anyone selling a vehicle must follow specific advertising rules. These rules apply to dealers and private sellers and aim to keep ads honest and clear.
The Louisiana Motor Vehicle Commission (LMVC) set these rules to protect buyers from tricks and unfairness. All vehicle ads must be truthful, easy to see, and easy to understand. A seller can't use words that might fool people, like "write your own deal" or "everybody financed." They also can't claim to have special deals with car makers.
When showing a price, the seller must give the total cash price without hiding any costs. They should never say "lowest price" or "best deal."
If a seller offers a rebate or discount, they must show the original price and the price after the discount. They can't advertise any savings claims for used cars.
Selling a Vehicle with a Lien in Louisiana
Certain considerations must be made if an individual in Louisiana wishes to sell a vehicle with a lien still on it.
The first step is to contact the lienholder, who is the party that provided the loan for the car, to obtain the payoff amount for the loan. The lienholder can also offer guidance on selling the vehicle to a private buyer.
When selling the vehicle privately, the seller has two options. They can either pay off the loan before selling the car or find a buyer who is willing to pay off the loan on their behalf.
Finding a buyer willing to pay off the loan may be challenging, so an alternative option is to trade the car at a dealership. While this might be the easiest option, the trade-in value at a dealership is usually lower than what could be obtained through a private sale.
It is also essential to consider the possibility of being "upside down" on the loan, which means owing more money than the car is worth. In such cases, the seller may need to pay the difference between the vehicle's trade-in value and the remaining loan amount.
Obtaining a Lien Release
Once an individual in Louisiana has fully paid off their auto loan, the lienholder is responsible for informing the Louisiana OMV about the lien release. This can be done through the OMV's Electronic Lien and Title Services or by submitting the required paperwork.
Certain documents must be submitted to the OMV to obtain a clear Louisiana title and complete the title transfer process.
These include the Form DPSMV 1799, the title certificate reflecting the lien release, and a letter from the lender on their official letterhead confirming that the lien has been satisfied. This letter should include the lienholder's name, address, and telephone number.
Additionally, a copy of the current vehicle registration needs to be provided along with payment for the lien release fee, which amounts to $26.50.
Motor Vehicle Sales Tax in Louisiana
In Louisiana, the motor vehicle sales tax applies to a wide range of motorized and non-motorized vehicles. This tax covers not only cars and trucks but also motorcycles, mobile homes, motor homes, campers, trailers (boat and utility), and even off-road vehicles. Essentially, if it needs to be registered in Louisiana, it is subject to this tax.
The state sales tax rate is 4.45%. However, most Louisiana parishes and municipalities also have local sales taxes. These local taxes vary significantly, ranging from 1.85% to 7%. So, when someone buys a vehicle in Louisiana, they're looking at a total sales tax of anywhere from 6.3% to 11.45%.
Interestingly, the tax rate isn't based on the seller's location. Instead, it is determined by where the buyer lives. This means that if a person from New Orleans buys a car in Baton Rouge, they'll pay the tax rate of New Orleans, not Baton Rouge.
Who Pays Sales Tax When Selling a Car Privately in Louisiana?
When a vehicle is sold privately in Louisiana, the buyer is responsible for paying the sales tax. This is true whether the car is purchased from a dealership or in a private sale. The tax is due by the 40th day following the date of purchase. So, if someone buys a used car from their neighbor on June 1st, they have until July 11th to pay the tax.
The buyer has two options for paying the taxes and other fees. If they're buying from a dealership, they can do it through the retail dealer. But they must handle this directly with the OMV in a private sale. Remember, a certificate of title in the buyer's name won't be issued until all taxes and fees are paid and all required documents are provided.
Sales Tax for Vehicles Sold in Louisiana to Residents of Another State
Louisiana's tax rules also cover situations where an out-of-state resident buys a vehicle in Louisiana. In this case, the buyer still needs to pay Louisiana's sales tax, but they get a 30-day grace period. The tax is payable by the 30th day after the vehicle first enters Louisiana.
However, Louisiana recognizes that the buyer might have already paid a similar tax in their home state. To avoid double taxation, Louisiana offers a credit against its 4.45% state sales tax. This credit is granted if the buyer's home state allows a similar credit for taxes paid in Louisiana.
Note that this is a rate-to-rate credit, not a dollar-to-dollar one. So, if a buyer paid 3% tax in their home state, they'd get a 3% credit in Louisiana, leaving them to pay the remaining 1.45% state tax.
Unfortunately, this credit doesn't apply to taxes paid in a foreign country. So, if someone is moving to Louisiana from Canada or Mexico and bringing their car, they'll have to pay the full Louisiana tax without any credits.
Exemptions from Sales and Use Taxes
Louisiana does offer some exemptions from sales and use taxes on motor vehicles, but these are pretty specific.
The primary exemption is for military personnel. If a military member imports a vehicle into Louisiana while on active duty, they are exempt from paying use tax. This exemption applies if they provide proof that sales tax was previously paid on their vehicle in one of the 50 states.
To qualify for this exemption, military personnel must show two things: documentation that they paid sales tax in another state and proof of their active duty status. This proof can be a photocopy of their military ID and orders or a statement from their commanding officer.
Note that this exemption doesn't extend to everyone, specifically to nonprofit, charitable, and religious organizations. Even though these organizations might be exempt from some types of taxes, they must pay motor vehicle sales and use taxes in Louisiana like any other buyer.
Legal Requirements After Selling a Vehicle in Louisiana
Sellers in Louisiana must follow legal requirements during and after selling a vehicle to facilitate a smooth ownership transfer and avoid liabilities. The necessary steps involve accurately disclosing the odometer reading, properly transferring the title, informing the Louisiana OMV of the sale, taking care of the license plates, and canceling the insurance.
Complying with the Odometer Disclosure Requirements
Complying with odometer disclosure requirements is crucial when selling certain vehicles that are not exempt from odometer reporting.
For vehicles under ten years old lacking an odometer disclosure statement on the title's back, a supplemental odometer statement, Form DPSMV 1606, is necessary.
Both parties must fill out Form DPSMV 1606 when selling such a vehicle, providing precise mileage details and confirming its accuracy through their signatures. This form acts as a legal agreement between buyer and seller regarding the vehicle's odometer reading at the time of sale. It helps prevent odometer fraud and ensures transparency in the transaction.
Transferring the Title to the New Owner
By properly executing the title transfer, the seller is relieved of any liability associated with the vehicle, while the buyer assumes legal ownership and the accompanying responsibilities of registration and insurance.
Several essential documents are required for a successful title transfer in Louisiana. These include the current vehicle title, buyer's and seller's driver's licenses or IDs, and proof of Louisiana liability insurance.
During the private sale, the buyer and the seller must complete the relevant sections on the back of the title accurately and legibly. This involves providing necessary information such as legal names, signatures, addresses, odometer readings, date of sale, and purchase price.
In cases where multiple owners are listed on the title, the number of signatures required depends on the connection between the names. It can be "and" (all listed persons sign), "or" (either seller signs with a single signature), or "and/or" (both sellers sign). If no connection is specified, it defaults to "and," requiring all owners (sellers) to sign.
In Louisiana, the seller must sign the title in the presence of a notary. To locate a local notary, individuals can utilize the Notary Search system provided by the Louisiana Secretary of State, accessible by name or zip code.
The buyer then takes the assigned title, proof of Louisiana insurance, their ID, and the applicable fees and taxes to their local OMV office to complete the transfer of ownership.
Does a Seller Need To Be Present During a Title Transfer in Louisiana?
The seller must typically be present during a Louisiana title transfer. However, certain circumstances may arise where the seller cannot be physically present.
In such instances, the buyer must have at least one witness accompany them to validate the transaction. This witness plays a crucial role in confirming the authenticity of the sale. Additionally, the buyer must possess a copy of the seller's ID for the title transfer process.
Notifying the Louisiana OMV of the Sold Car
When someone sells their car in Louisiana, they must notify the OMV about the sale. This step is crucial for several reasons.
First, it helps protect the seller from any legal or financial responsibilities if the new owner gets into an accident or commits a traffic violation. Without this notification, the vehicle remains tied to the seller in the OMV's records, potentially making them liable.
Second, it helps maintain accurate vehicle ownership records, which is vital for law enforcement and other administrative purposes.
Fortunately, Louisiana makes this process easy through its "Notice of Vehicle Transfer" system. In this online service, the seller can submit a notice by providing the following information:
- VIN
- License plate number
- Registration expiration date
- Their own driver's license number
- The date of sale
- The buyer's name and address
- The selling price
Once they submit this information, the OMV's record is immediately flagged, indicating the vehicle has been sold. It is worth emphasizing that the legal transfer isn't complete until the new owner applies for the title.
Removing the License Plates and Canceling Insurance
Once the seller has completed the "Notice of Vehicle Transfer" on the OMV website, they should destroy their regular automobile license plates. This action stops anyone from using these plates illegally.
However, the rules differ for truck and trailer plates, which can stay with the vehicle and transfer to the new owner. If the seller has special prestige plates, they can keep these.
Alternatively, if the seller prefers not to destroy the plates, they can surrender them at their local motor vehicle office or mail them to the OMV in Baton Rouge.
It is also crucial for the seller to cancel their vehicle insurance after the sale to avoid paying for coverage on a car they no longer own.