Whether you use cash or a check to buy a used car from a private seller, it's wise to document the transaction with a receipt. This paperwork is especially important for a cash payment, which, unlike a check, cannot be easily verified or traced. This cash receipt also comes in handy as additional proof of the sale and verification of the purchase price for the state's motor vehicle agency. A bill of sale also can function as a receipt in a used-car purchase, verifying that cash has changed hands and the vehicle has a new owner.
Prepare a document showing the parties, terms and date of the sale. If you are working with someone whose full name you don't know when you meet to show or view the vehicle, leave blanks to fill in when you complete the transaction. Also, leave a blank for the purchase price, which may be renegotiated as you learn more about the vehicle's condition. The exact wording of the document is less important than the fact that it clearly communicates who has bought and sold the car, as well as the amount of the purchase price and the date the cash changed hands.
Use a bill of sale if you have one handy to document the cash purchase and sale of a car. Office supply stores sell all-purpose bill of sale forms that can be conveniently used for cash auto sales. Your state's motor vehicle department will likely have a blank form that you can use as well. Bills of sale are also available online and can be downloaded and customized. As with a cash receipt, fill in the name of the buyer and seller on your bill of sale, and include the date and the purchase price.
Bring the cash receipt or bill of sale to your state's motor vehicle licensing department if you have purchased the vehicle. If you have sold the vehicle, fill out the seller's report of sale on the vehicle's title and mail it to your state's motor vehicle department to release yourself from liability and document that you no longer own the car.