When it comes to buying someone you care about a gift, you will often want to go all-out with your purchase. Perhaps it could be a fancy piece of jewelry? A dream holiday? Or maybe you’ll go for front row seats for their favorite band? While these are all great ideas, there is one which is often seen as the ultimate gift: buying a car.
For obvious reasons, a new car is typically saved for a special occasion – such as a 17th birthday celebration or graduation. It’s a massive purchase and one that involves significant financial investment. These points are also where pitfalls appear. If you end up making a mistake, it can cause you emotional and monetary stress for years to come.
This is why it’s essential to take care with such a purchase. To offer a helping hand, here’s a quick guide to buying a car as a gift.
Get your finances in order
Before you think about splashing out on a car, you first have to analyze your financial situation. Can you afford to buy the vehicle outright? Will you need to acquire a loan to cover the costs?
In general, it is advised to avoid going down the financing route for a gift. Try and stay within your means. If that signals a car is out of the question, there are plenty of other gift options available.
Ensure the car is the right one
Now you might have the image in your head of springing a car on someone to their complete shock. However, this is a risky way to do it – particularly if you don’t ask them questions beforehand about the type of vehicle they’d like to drive.
It might go against those looking for the surprise element, but take the recipient to a local car dealership. Say you’re in Los Angeles and want to go all-in with a luxury car like a Maserati. In that case, you would want to visit an official Maserati dealer in Los Angeles to find the right vehicle. With a large outlay like this, you want to ensure the recipient is perfectly happy with the choice.
Consider the ongoing costs
Along with the budget for the initial outlay of the car, you also have to account for the ongoing costs. First of all, you have to answer one question: Will you or the recipient pay for the car’s ongoing costs like gas and tax? If it’s the latter, you’ll have to make sure they can afford these recurrent expenditures.
Also, you might be in line to pay a gift tax. If the market value of the vehicle is above $15,000, you’ll have to pay tax on the excess cost.
Sorting out the transfer
Once the purchase has been made and the car gifted, you will have to transfer the title to the recipient. Title-transfer requirements can differ depending on a particular state’s DMV. Once the recipient receives the title, they will need to take this along with their insurance details to the DMV, register the car in their name, and finally receive a new title detailing their ownership.