What Happens If I Win a Car? (Can I Sell It For Cash?)

We all dream of winning that brand new car in a game show or prize competition. But, have you ever thought, what if I win a car?

Can I sell it for cash? Are there taxes and other hidden costs that I should be aware of?

Key Points

Winning a car is everyone’s dream.

Remember that you must pay taxes on the vehicle (sales tax), registration, insurance, and other fees.
The dealers will not consider the car “new” as you will be the first owner on the title.
Depending on your state’s laws, you may also need a license to drive the car.

Let’s take a deeper dive into this article with a real-world story.

Can I sell it back to the dealership it came from?

For starters, if you have won a prize in a competition, and as long as you are the legal owner, you are free to sell it to whoever you like.

The owner of the prize is usually the person who paid for it or the person who won it in the competition.

So as long as you are the legal owner, you can sell it to any dealership or third party willing to buy it.

However, the car will NOT be considered a new car — even with nearly no miles.

All the warranties and such should still be good. But the ownership title is in your name means it is now a used car.

Some dealerships will try to convince you to purchase one of their vehicles and use your prize car as a trade-in.

Another option might be for the dealer who sells it to you to buy it as a demonstrator, but you will get wholesale price, at best.

What do you have to pay when you win a car?

As the winner of a car, you will likely have to pay taxes on the car’s value, registration, delivery, and insurance fees.

What happens if you win a car on a game show? Let’s take a deep dive into an illustrative example.

The Price Is Right

Take the example of The Price Is Right, a game show based in Hollywood, California.

You entered with high hopes as a contestant, and congratulations, you have just won first prize in the show. A brand new Toyota Camry worth $50,000!

However, before becoming a contestant, you signed a non-disclosure agreement stating you will tell nobody or risk forfeiture of all prizes until the show airs on TV.

Ten weeks later, the show airs.

Since, you are based in New York State, outside of California, where the show is filmed. Being a non-resident state income tax bill will amount to 7% of the car’s value.

Your prize is worth $50,000 the non-resident income tax bill 7% or $3,500. The tax bill must be paid as a certified check before anything can happen.

A few more weeks pass before Toyota of Hollywood calls you and arranges delivery.

Toyota Hollywood, the dealer, then chose to ship it to New York to get full credit from Toyota on the sale and off their lot as new models are coming in.

Another month goes by to finalize shipping.

The process from you first winning the prize to actually receiving the car has taken five months.

The next day you go to the Department of Motor Vehicles (DMV) to get new plates and the title. The DMV asks for a “Bill of Sale,” which you don’t have!

After explaining that you won it on The Price is Right, the DMV determines that instead, you need a Certificate of Origin, which you don’t have either!

Fortunately, you have the tax bill, and the new plates and titles arrive after a week of back and forward.

Now for the Federal taxes.

Months later, the 1099-MISC arrives from CBS, the show’s producers. The extra $50,000 has pushed you into a higher tax bracket.

Your accountant calculates the difference between the “with car” and “without car” taxes, which amounts to 30% of the car’s value, or an extra $15,000.

He also organizes for the California pre-paid tax (filing non-resident form) to be returned, but this is offset one for one by the 7% NY State sales tax.

Total taxes: 37% or $18,500.

Every situation will be different; this example illustrates the timeframes and possible taxes involved in winning a car.