There are always lots of question on how to use transfer paper with vinyl. I use cheap clear contact paper in place of the transfer paper, but it is the same method.
Once you cut the design you want, pull away only the vinyl you do NOT want to appear on your final project, leaving only your design on the vinyl backing paper. Then apply the sticky side of the contact paper (clear) to the colored side of the vinyl, rub each letter or image - using a credit card helps. Then peel the paper vinyl backing away from the contact paper. Your vinyl image will be stuck to the contact paper. Now place your vinyl image where you want it, rub the vinyl part once more and then gently peel away the contact paper and the image is where you want it. Hope this helps!