When you sell a car to another person as a private party, the transaction is fairly straightforward. You sign a bill of sale agreement, accept payment, sign the back of the title to the new owner and hand over the keys. If you decide to transfer the car as a gift, the process is nearly the same and just as simple, with a few key exceptions. Keep in mind that the exact process varies by state.
Note on the bill of sale agreement the sales price as zero (in some cases, it's called a simple written statement of gifting a vehicle instead of a bill of sale since no money is changing hands). Indicate clearly that the car is being transferred as a gift. This is important because the new owner needs this bill of sale in order to register the vehicle. He has to prove he did not pay for the vehicle to avoid sales tax (though some states may still charge a fee despite it being a gift).
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Take the bill of sale to a notary public (located at banks and insurance offices) along with the new owner to sign the document. While this step is not always required, it ensures that you have a witness to the agreement stating that you're selling the car as a gift.
Write the word "Gift" where designated on the back of the title in place of the sales price before signing it over to the new owner.
Fill out any additional forms required by your state department of motor vehicles for gifting a vehicle. Some states require you to fill out an affidavit declaring the car as a gift to the new owner in addition to your other sales paperwork.
Make sure you have an up-to-date state vehicle inspection for the car before transferring it as a gift.