Agreement on free use of a car for individuals: sample

Features of the agreement

An agreement for the free use of a car between its owner and another person is a loan agreement.

In accordance with this document, one of the parties to the agreement transfers a car to the other party for temporary use. In this case, the borrower does not have to pay anything to the owner of the vehicle. The contract can be concluded for a definite or indefinite period. If a specific period for returning the car is not agreed upon, the document should include the “on demand” condition.

The contract for the free use of a car is drawn up in two copies. It can be generated electronically or filled out by hand with a document template.

It should be noted that this agreement is used less frequently than a power of attorney. But it is this document that will maximally protect the interests of the car owner and the borrower.

Agreement for free use in Russian legislation

The possibility of concluding agreements for the gratuitous use of various property is expressly provided for by current Russian legislation. In particular, this issue is addressed in the provisions of Art. 689 of the Civil Code of the Russian Federation. Moreover, such an agreement can be concluded between any legally capable persons, both individuals and legal entities, and affect almost any property, including vehicles.

At the same time, this agreement and the parties involved in it are also subject to certain requirements regarding the rental process. For example, the current provisions of Art. 689 of the Civil Code of the Russian Federation stipulate that only property that is not prohibited to be transferred by law can be transferred for free use, as well as property that has stable generic characteristics - does not lose its basic natural properties during the process of use. However, cars themselves are such property.

Also, from the legislation relating to rentals, standards for improving the car are also taken, which can be done at the request of the temporary user. Thus, possible changes and improvements to a car are recognized by the owner of the person using it only if they are separable without violating the properties of such a car.

Otherwise, if the improvements cannot be separated without causing damage to the vehicle, they are the property of the owner of the vehicle, and the person who used them and carried out such improvements cannot demand compensation.

note

An agreement for the gratuitous use of a car has significant differences from a power of attorney. At the same time, the conclusion of such an agreement has a large number of advantages in comparison with the confidential nature of the transfer of the right to use a vehicle. These benefits can be important for both individuals and legal entities.

When may a contract be necessary?

The parties most often enter into this agreement after assessing all its advantages. The document will help the vehicle owner resolve issues related to its maintenance and repair. Concluding an agreement is beneficial for organizations and individual entrepreneurs, because they will be able to include the costs of maintaining a machine as part of the costs of conducting business activities. As a result, the amount of tax to be transferred to the state budget will decrease.

Participants in the transaction can get by with drawing up a simple power of attorney. But at the same time, the car is not re-registered by the traffic police, and it is the owner who will receive receipts for payment of fines. In the event of an accident, he will be the main suspect. Concluding an agreement will help avoid these problems.

A contract for the free use of a car, a sample of which can be downloaded below, is drawn up, in particular, in the following cases:

if the car is transferred for work to a private taxi service;
if the owner of the vehicle (individual) uses it for business purposes;
when transferring transport free of charge to another party for a long period.

If the contract is drawn up correctly, it will become important evidence in the event of litigation.

Hidden taxes when using an agreement on free use of a car for individual entrepreneurs and LLCs

When a car is transferred under such an agreement, the following tax issues arise. From the lender's side:

He must pay transport tax (he is the owner of this car).
Along with the transfer of the car for free use, he must stop accruing depreciation if it has the form of a legal entity.

Tax issues are also present for the recipient of the loan:

He needs to indicate non-operating income that appears as a result of the gratuitous use of the car. This will need to be done at the end of each reporting period and in an amount equal to the market value of the vehicle received.
If the vehicle breaks down and expenses arise, the tenant needs to take such amounts into account when further taxing profits.

To determine the market value, you can hire an appraiser.

Preparation of contract

The contract for the free use of a car for individuals and organizations does not have a set form. When drawing up a document, it is necessary to focus on the general terms of transactions described in Chapter 9 of the Civil Code of the Russian Federation.

The contract must indicate the following:

passport (for individuals) or installation data of both parties;
description of the subject of the contract;
description of the included vehicle components;
list of documents transferred under the agreement;
rights and obligations of the parties;
date of conclusion of the agreement.

The agreement consists of the following sections:

Preamble. The names of the parties are indicated here.
Subject of the agreement. This section provides detailed characteristics of the vehicle (make, color, license plate, engine number, number and series of registration certificate, etc.). The cost of the machine and the purpose of its use are also indicated here.
Rights and obligations of the parties.
Duration of the deal. Here it is necessary to specify the period for which the property is transferred to the borrower.
Responsibility of participants. This section describes in detail what exactly the lender and borrower are responsible for.
Conditions for early termination of the agreement.
List of applications. Here you can indicate the appraisal report and the vehicle acceptance certificate.
Addresses and details of the parties.
Signatures of the parties.

You can download the contract for the free use of a car below.

The transfer deed is the main document confirming the transfer of property from the owner to the borrower. It lists the characteristics of the car, the equipment being transferred, and existing defects.

Contents of the agreement

Typically, these types of agreements are not extensive. They contain no more than 10 articles reflecting the most important conditions.

Item

Without identification of the transferred object, the agreement is considered not concluded. Information about transport should be as detailed as possible; their purpose is to identify the vehicle. If the information is vague or incomplete, then instead of giving away a new Mercedes, you can get an old and battered one back. Therefore, in the relevant article it is necessary to indicate:

brand;
registration number plate;
year of issue;
body number;
VIN number;
PTS details.

The contract must indicate the authority of the owner and a document confirming it. In other words, include an article containing information about the vehicle registration certificate and its details.

To protect yourself from the demands of bailiffs or other persons, officials or civilians, you need to include a condition that the car is not pledged, under arrest or is not the subject of a dispute. If someone makes demands, the contract may be terminated.

It is recommended that the contract for the gratuitous use of a vehicle indicate the purposes for which it will be used.

Special attention should be paid to the cost of the subject of the agreement. The fact is that during operation the car can be destroyed or significantly lose in value. To save yourself from unnecessary price determination, you need to immediately include in the contract a price that the parties agree on. This cost will be taken as a basis for possible calculations.

Rights and obligations of the parties

This section is important because it regulates important things regarding operation. So, for example, you can determine that the recipient of the transport must:

repair;
maintain working condition;
carry out maintenance;
return in working order.

In the same section it is possible to provide for the period during which the car must be transferred.

The provision for incurring operating costs can be included in this section or made as a separate one. Since this is one of the most important parts of the agreement, it is better if these provisions are structured separately.

Operating costs

The costs associated with the use of the vehicle are borne by its recipient, not the owner.

To avoid confusion and misinterpretation, you need to list the types of expenses that the recipient pays. They are usually divided into two categories: operational and maintenance.

Operating costs consist of:

expenses for fuel and lubricants;
washing;
interior cleaning;
air conditioner maintenance.
To ensure normal operation of the car you need:
maintenance;
replacement of parts with a short service life;
tire replacement, seasonal or as needed;
elimination of breakdowns and malfunctions.

The MTPL, DSAGO or CASCO policy is paid for by the recipient. The type of insurance is agreed upon by the parties.

Responsibility

A contract for the free use of a car must include this section. It is recommended to provide for as many incidents as possible in order to avoid disagreements.

The provisions of this section may vary. For example, it can be established that if deficiencies are found, the car must be replaced. The defects may have been unknown to the parties before the transfer of the transport, so the time of their discovery does not matter.

It is imperative to indicate that the recipient is responsible for the death or damage of the vehicle. If such a case occurs, he compensates the owner for expenses or the cost of the subject of the contract.

Validity of the agreement

This section specifies the period during which the vehicle will be used by the counterparty and the conditions for its extension. If you plan to use it for a long time, it is recommended to provide automatic renewal. It lies in the fact that if no one notifies of their desire to terminate the contract, then it is extended for the same period and on the same conditions.

If the parties do not specify a term, the agreement will be considered unlimited. It will be terminated upon prior notification of one of the parties to the contract for the free use of the car. You can also provide conditions for early termination.

Operating costs

Another point that lawyers recommend must be included in the sample contract for the free use of a vehicle is the distribution of expenses for maintaining the car. It is clear that it will not be logical for a situation where the car is given for free use and the owner of the property pays for the cost of gasoline, technical inspection and tire repair. But even if in real life everything seems to be clear, all points should be clarified in the contract.

Perhaps the parties will be able to agree and divide the costs of major repairs in a ratio of 50% to 50%. Simply put, the expected costs of maintaining the vehicle must be clearly stated in the contract, up to and including payment for insurance under compulsory motor liability insurance and comprehensive insurance.

What documents should be drawn up in case of free use of a car?

The fact of transferring the car for free use must be documented in a loan agreement. Under such an agreement, the lender (the owner of the car) transfers the item for free use to the borrower. The borrower, who received the property free of charge, undertakes to return such thing in the same condition, taking into account normal wear and tear or in accordance with the terms of the agreement (Article 689 of the Civil Code of the Russian Federation).

A car loan agreement is concluded in simple written form and does not require notarization or state registration. By the way, it is not necessary to use the term “loan” in the name of the agreement; “gratuitous use” can also be used.

Please note that if a third party acts on the side of the car owner, a notarized power of attorney is required. At the same time, the text of such a document must necessarily reflect the right to transfer the thing for use to third parties free of charge.

Draw up an Acceptance and Transfer Certificate for the car and its accessories, including the registration certificate, MTPL policy, diagnostic inspection card (if available), radio, keys, first aid kit, fire extinguisher, etc.

After returning the car, you can draw up an inspection report of the vehicle for any identified damage or deficiencies. If everything is in order, the person driving the car can ask the owner to draw up a receipt stating that there are no claims.

Rules for drawing up a free car rental agreement

The following essential conditions must be mentioned in the text:

parties to the agreement (passport details of individuals and full legal address for a legal entity with passport details of its representative);
subject of the contract - a vehicle with its identifying characteristics (make, model, year of manufacture, state number).

The text must indicate provisions that, at the request of the parties to the agreement, can also be considered essential:

the grounds on which the owner owns the vehicle (sale and purchase agreement, etc.), as well as the existence of rights to the vehicle of third parties;
purposes of use (personal, cargo transportation, etc.);
cost of the vehicle (certificate of book value under the owner-organization, appraisal or certificate if the owner is an individual);
liability of participants when operating the vehicle (causing damage to the vehicle itself and to other persons and their property);
duties of the parties;
maintenance costs;
grounds for early termination of the agreement;
validity period (if it is absent, by default the validity period of the agreement is considered to be 1 year from the date of signing);
terms of renewal;
other conditions important for both parties.

Filling example

To conclude a free car rental agreement you will need:

Documents confirming the identity of persons authorized to sign:

if one of the parties to the agreement is an individual, then a passport of a citizen of the Russian Federation will be required
if the party to the transaction is an individual entrepreneur or a legal entity, then a passport of the manager or legal representative acting on the basis of a power of attorney from management, an extract from the register of legal entities, the company charter, an order or other document appointing a director are provided

Documents for the car:

PTS
registration certificate
diagnostic card
OSAGO insurance policy

An examination indicating the estimated value of the vehicle.

Main advantages

First of all, the main difference between a gratuitous use agreement and a power of attorney is that the person receiving the right to use a motor vehicle is granted not only a number of rights, but also certain responsibilities.

Accordingly, in the event of problems with a vehicle that was transferred for use under a contract, and not by proxy, the recovery of compensation and damage from the person managing it is greatly simplified. In addition, the existence of an agreement may be the basis for releasing the owner from fines in the future, or the agreement itself may provide for the obligation to pay all automatically accrued fines for traffic violations by the user of the vehicle. A person driving a car by proxy does not bear any financial responsibility for damage caused to such a car.

In general, the advantages of an agreement on the free use of a car include:

Financial liability of the person who will use the vehicle.
The duty to regularly maintain the vehicle - refuel it, change tires, wash and maintain it.
The ability to include expenses for operating a car for legal entities into accounting expense items. With a power of attorney, this is not possible.
The person who is the owner of the property receives the right to terminate the contract and compensate for losses if the person disposing of the property under the contract violates the conditions and procedure for its use or uses it for other purposes.
Full details of any other rights, obligations and responsibilities for the use of property under the agreement.

A power of attorney to drive a car can also significantly expand the rights of the authorized person, including in the interests of the principal. Thus, a power of attorney may allow for technical inspection, registration of a car with the traffic police, its sale, transportation across the border and other actions, while under the contract their implementation will be impossible.

A free transport rental agreement between legal entities or individuals has several advantages. Compared to a power of attorney, this document imposes on a third party not only a number of rights, but also some obligations.

If problems arise with a car that is transferred for use under a contract, collection and compensation payments are significantly simplified.

The document makes it possible to exempt the owner of the car from fines and other types of penalties for violating traffic rules. Those who drive a vehicle by proxy do not bear such responsibility, and the owner of the car pays for damage and fines.

What is better - a contract or a power of attorney?

Some car owners limit themselves to issuing a power of attorney for the right to use the car to another person. This is a very common practice. Not everyone understands the difference between a contract and such a power of attorney. Of course, persons who received a vehicle from the owner can use the vehicle on the basis of both documents.

But only in an agreement is it possible to provide a detailed description of the rights and obligations of the parties. As already noted, maintaining a car constantly requires certain costs. It can stipulate that they fall on the person who will use it. In such circumstances, legal entities may expense these costs.

Responsibility of the parties

This clause in the sample agreement for the gratuitous use of a vehicle should also be considered a mandatory provision. It is very important that each party understands the extent of their responsibility. That is, the user was clearly aware that for destruction or damage to the vehicle, he would be obliged not only to reimburse its cost as specified in the contract, but also to pay certain penalties.

The owner of the car must also understand that he bears a certain responsibility, for example, for the transfer not within the time stipulated by the contract, or for the presentation of property with obvious flaws that were hidden at the conclusion of the transaction.

Features for trucks

Both a passenger car and a cargo vehicle can be transferred for temporary use free of charge.

When concluding a freight transport agreement, it is recommended to take into account:

area of use of the vehicle. To prevent severe wear and tear, it is recommended to clearly indicate for what purposes the machine will be used, how much cargo it can transport in one trip, and so on.
which party will pay the running costs and in what quantity. It is especially important to determine the costs of the Plato system and transport tax

Since a truck is most often used by legal entities, it is important to take into account the nuances of taxation of this transaction. Unlike a lease agreement, the lender does not make a profit, which means there is no need to pay income tax.

Under the current agreement, the borrower can classify the money spent on repairs and maintenance as other expenses, which will reduce the amount of taxable profit.