So you’ve finally sold your car, but now what? Well firstly, Congratulations! And while it’s a great feeling to finally sell it, keep in mind that the entire car selling transaction isn’t finished just yet. In fact, there are some things you need to do first before you can finally say that it’s over. Some of the most important things you need to do are to: 1) transfer your ownership to the car buyer, and when applicable- 2) transfer your car loan, and 3) transfer your car insurance. So if you've sold your car and are wondering what do you do next, then read our detailed advise below.

Transfer of ownership to the car buyer

It’s important to transfer vehicle ownership to the new buyer because it removes you of your responsibilities to the car. Let’s say you’ve sold your car to your brother’s friend. Since you know them well, and they were highly recommended by your sister, you’ve decided it doesn’t matter to transfer your car’s title.

After a few months, your sister’s friend suddenly gets into an accident, seriously injuring two kids who were walking on the sidewalk. The judge sentences him to 15 years, and orders him to pay P500,000 worth of damages to his two victims.

Now, you might think that he will shoulder it, since the car is already his. Unfortunately, you might be held responsible for paying the entire amount of fees, since legally-wise, you still own the car.

Here’s a different scenario: what if your brother’s friend decides to use the car to rob a bank and gets caught in the process? There’s a big possibility that you’ll be charged as an “accessory to the crime”, since you provided the “getaway” vehicle they used during the robbery. Long story short: always transfer ownership of the car once you have sold it.

Documents Needed When Transferring Car Ownership

So what do you do next after you’ve sold your car? The truth is that you are not mandated by law to do the car transfer yourself. In many cases, it’s really the buyer who does it, although he will need a couple of important documents from you first. Make sure that you have them all beforehand so you won’t delay the transfer.

Documents Required:

  • Original Certificate of Registration (CR)
  • Latest original Official Receipt (OR) of payment
  • The car’s original Deed of Sale
  • Clearance from Philippine National Police-Traffic Management Group (PNP-TMG)

PNP-TMG Clearance requirements (TRANSFER OF OWNERSHIP)

  • Deed of Sale* (consists of: Date of sale, Vehicle identification number (VIN), Selling price for the vehicle, Seller's name and address, Odometer mileage readings, Description of the vehicle, and Buyer's name and address)
  • LTO Certificate of Registration and Official Receipt
  • Cancellation/Release/Assumption of Mortgage for mortgaged vehicles
  • Secretary's Certificate for vehicles acquired from a company or corporation
  • Special Power of Attorney if the vehicle was sold through a representative.
  • Actual inspection of MV with duly accomplished MVIR
  • Confirmation of CR/OR (Cir-91-137) if issued by other LTO Agency
  • Endorsement from the Insurance Company to the New Owner
  • Taxpayer's Identification Number (TIN)

You only need to give the Deed of Sale and the Certificate of Title if you are selling your car privately. Things become more complicated if you’re selling your vehicle to a dealer, which would often include most of the required documents we’ve mentioned above.

Transfer of Car Loan

Technically, it’s not possible to transfer your car loan to the new buyer. And since the car buyer will have to get a new car loan for the vehicle, they have to meet the standard auto loan requirements first. Once approved, then borrowing money becomes almost as easy as reciting the alphabet.

If your car is on loan, then you’re probably thinking that the new buyer will take over your loan payments by sending the money or checks on your behalf. We sincerely hope you don’t do this, not unless you really know and trust the person. Remember that your name is still on your car loan contract, so if the new buyer suddenly disappears and stops sending you money, then it’s your credit that takes the hit, not them.

The best and smartest thing to do next after you’ve sold your vehicle is to have the buyer refinance your loan, pay you the exact, full amount of the car, and then let them take over the monthly payments to their bank or lender.

Transfer Of The Car’s Insurance Policy

Transferring your car's insurance policy after a sale absolves you from paying the remaining insurance fees, and obliges the new car owner to pay for it, instead. What you need to do next after selling your car may be different from one insurance company to the next, so it’s important to consult with your insurer on what steps and necessary documents are needed to ensure a seamless transaction.

By the way, you don’t have to cancel your insurance if you’re planning to buy a new car. All you need to do is to transfer your insurance to the vehicle you’ve recently bought. And if you’re not planning to buy a new car, then it’s best to cancel your policy and let the seller get his or her own car insurance.