Gifting a car to someone is a good way to avoid taxes and fees you would have to pay in a private sale. In Illinois
, you have to follow the standard process of transferring and registering a title but with the extra step of filling out a RUT-50 form for tax exemption purposes. You will still have to pay a few minor fees for transferring the title, but they are minor compared to the money you’ll save. Giving a car to someone is an exciting affair. It’s a gift that feels great to give and even better to receive, but you should be aware that there are a few extra strings attached. Each state has different rules and regulations governing the process.
That’s why Jerry
, the car insurance
super app, is here to guide you through the necessary steps. In this article, you’ll learn about how to give a car as a gift, mistakes to avoid, and the amount of money you’ll save by gifting instead of selling. RECOMMENDEDNo spam or unwanted phone calls · No long forms
How to buy a car as a gift in Illinois
It’s much easier to buy a car for someone than to give them one you already own. To that end, bringing the person to the dealership with you is the simplest, most streamlined way to gift a car. The person can pick out the car they like, and you will avoid any potential legal or financial issues.
Remember that a car with liens
or outstanding payments cannot be given as a gift. All payments must be completed before the title can be transferred. In addition, cars can only be given as gifts to family members. Key Takeaway If you’re giving a new car as a gift, make the process easier by bringing the recipient to the dealership with you. Remember, as well, that you can only gift a car to a family member.
How to gift a used car in Illinois
If you plan on surprising your recipient with a gifted car, transferring a vehicle you already own is the easiest way. It doesn’t matter if it’s a beat-up Oldsmobile or a shiny new Honda, you can still gift it provided there are no payments remaining on the vehicle.
The process is the same for giving someone a car you don’t need anymore. Follow the steps listed below to legally gift a car in Illinois.
Negotiate the terms of the gift with your recipient
Once the excitement of your gift has died down a little, take a moment to discuss the finer details with your giftee. There will still be costs and payments to make, so it’s important to decide who will be responsible for them.
Illinois requires two fees to be paid for a title transfer: a $95 transfer fee and a $15 alteration fee (required to change the name on the title) for a total of $110. Residents of certain counties will also have to pay for a $20 smog check.
Between you and the recipient, decide who will pay for the title transfer as well as the costs for car insurance, maintenance, and fuel.
Here’s a table of the fees you and your recipient should consider.
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|---|
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| $101 (plus $25 if you want to transfer plates) |
| $547 (liability only)
$1,058 (full coverage) per year |
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Record the gift with a bill of sale
Despite the fact that the vehicle is being freely given as a gift, you still need to record the transaction with a bill of sale. An Illinois bill of sale
acts as a permanent legal record of the exchange, protecting you from any possible unpleasantness in the future. Make sure it is signed by you and the recipient to demonstrate that you both agreed to the terms of the gift. Transfer the vehicle title
The title transfer is the most important part of the car gifting process. It is what officially grants ownership of the vehicle to the recipient.
Both you and the recipient need to fill out and sign the vehicle title. You must also record the odometer mileage as well as the car’s VIN number on the title.
Next, you’ll have to contact the Illinois Secretary of State offices
to obtain a VSD-190 title transfer form and a RUT-50 tax exemption form. Visit your nearest Secretary of State office or contact them over the phone at 800-252-8980 to obtain the forms, as they are not available online. Once that is done, you have to visit an Illinois Secretary of State office in order to file the paperwork and pay the fees.
MORE: What is an RUT-50 tax form in Illinois?
Purchase Illinois liability insurance—or full coverage
Before you send your giftee out on the open road, make sure their vehicle is covered with a valid Illinois insurance policy
. After that, your recipient can enjoy both their new car and the peace of mind that comes with being properly insured. How to find affordable car insurance in Illinois
Saving money on car insurance in Illinois is as simple as downloading the Jerry app. Once you’ve typed in your information, Jerry will generate a list of competitive quotes from the nation’s top insurance companies in less than a minute.
Comparing quotes is free and easy. If you find something you like, Jerry can even help you cancel your old policy!
You’ve learned how to give a car as a gift, now Jerry wants to give you the gift of savings. Jerry users save an average of $887 a year on car insurance.
“Jerry
got me out of a bind! I bought a new car, and my existing insurance raised my prices and didn’t budge. Thankfully, Jerry got me an affordable rate without me waiting for phone calls all day.” —Felicia M.
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