When is a contract required during a vehicle sale?

A contract is required during a vehicle sale primarily when accepting down payments or trade-ins. This is crucial because a down payment signifies the buyer's commitment to purchase, while a trade-in involves transferring ownership of another vehicle to the dealer. Both actions create binding obligations that necessitate clear terms and conditions outlined in a contract to protect both the buyer's and seller's rights.

Having a contract ensures that all parties understand the financial arrangements and the terms of trade. It helps prevent disputes by providing a documented agreement that specifies the amount of the down payment, the value of the trade-in, and any other relevant details. While contracts may be relevant during test drives or discussions about financing options, they are particularly critical when actual financial transactions, like down payments and trade-ins, occur. High-value transactions might prompt a contract, but it's not solely limited to those circumstances.