What Is a Car Title? Things You Need to Know
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Summary:
A car title is a legal document proving that you own a vehicle. If you do not own the vehicle outright, there will be notes on your title about the lienholder or lender. When you finally pay off the car, you will receive the actual title and appear as the owner free and clear.
In the world of car sales and title loans, you’re going to hear a lot of different terms you might not have heard before. One of the most basic terms you might hear relates to your car title. If you’re brand new to car buying, it’s a good idea to know what a car title is.
A car title is a legal document that acts as proof of ownership of a car. In addition to proving car ownership, titles give owners a brief history of any serious damage noted by the owner’s insurance company and shows who the car legally belongs to (such as a lienholder). In this article, we’ll discuss what a car title includes, why it’s important, and how you can order a replacement should it be lost or stolen.
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What is a car title?
A car title (or certificate of title) is a legal document that shows a history of the ownership of a vehicle. It is usually a paper title, but electronic titles also exist. This acts as proof of who the car owner is. Generally speaking, titles will include the following data as identifying information:
- The name of the current owner
- Vehicle identification number (VIN)
- Odometer reading at the time of the sale
- Weight
- Sale financing information, including the lienholder’s name
- Title assignment section with buyer and seller’s names, addresses, date of sale, and signatures
Does your car title show a vehicle history report?
No, a car title and a vehicle history report are two different documents. It is a good idea to get a vehicle history report when buying a vehicle because it provides a window into the vehicle’s past. However, car titles can provide some information about the history of a vehicle. For example, cars that have gone through extensive damage (such as flood damage or a major accident) will often have branded titles. Branded titles will typically show the type of damage that was reported by the insurance company and may even fall into a specific category.
Pro Tip
Buying a branded title is a risky endeavor, because it means that you are the legal owner of a car that has a serious risk of breakdown. This is particularly true about salvage title cars and rebuilt title cars.
What types of car titles are there?
This actually depends on the state, but most titles fit into four different categories:
- Clear title. A clear title indicates that you own the car entirely, free and clear from any liens.
- Clean title. While it may sound similar to a clear title, a clean title means the car has not previously been in any significant accidents.
- Rebuilt title. As it sounds, a rebuilt title indicates the car needed significant repairs due to a major accident. Though the car is now legally allowed on the road, it may have some more hidden damage.
- Salvage title. A salvage title means the vehicle is extensively damaged and cannot be driven safely. The extent of the damage is estimated to cost more than the car itself, so the insurance company declares it a “total loss.”
Before you buy a used car, it’s best to search which types of car titles are issued in your state, as it can be difficult to determine which title is worth it.
How do you check what type of car title a car has?
You can find out the type of car title that you have through the VIN. Any used car dealership (or new car dealership) will be able to search the title using a title search service. From there, they will be able to tell you whether you have a clean title or not.
Are vehicle titles the same as vehicle registrations?
Not quite. Car titles are official proof of ownership of a car. Your vehicle’s registration shows that you are legally allowed to drive that car on public roads.
How do I get my vehicle title?
If you need to get a car title for a title transfer (title transfer) of any type, then you have to get your title at the DMV. This means you will have to do the following:
- Visit the DMV with required documentation. You’ll need proof of ownership, your ID, a title application, a sales tag, and proof of insurance.
- Hand documents to the DMV teller. Most DMV office workers will be happy to help you out, but you can also do this online in some states. You can find out more about your state’s title process by checking your state’s Department of Motor Vehicles’ website.
- Pay the title fees. Title fees can be as high as $155 in Illinois, or as low as $5 in North Dakota. It’s best to find out how much you’ll owe before going to the DMV.
Pro Tip
While this is most commonly done to transfer a title over to a new owner, you may also have to go to the DMV to register the title in a new state. When you move to a new state, you may receive an updated title as part of your registration process.
How do car titles fit into title loans?
Title loans use a car’s title as a form of collateral, which places a lien on the car’s title. This is similar to a car loan, where the car itself is collateral and can be repossessed if you fail to make loan payments. If you pay off the loan in a timely manner, the lien then gets lifted and you get to keep your car. If you don’t pay it off, the lender has the right to repossess your car.
The way it works can be hard to understand at first, which is why you should read articles on title loans before you think of reaching out to title loan lenders. You might be trying to purchase something you don’t really want.
Where should you keep your car title?
Once you’re given a title for your vehicle, you should never keep it in your car (unlike your current vehicle registration). Your best bet is to keep your current title in a safe place along with the rest of your vital documents.
What do you do if your car title was stolen?
A stolen title is more common than you think. Thankfully, this doesn’t mean that you’re out of luck. Here’s what to do:
- Call the police immediately and report the title stolen. They may ask you for your license plate number if the actual car has been stolen along with the title.
- Request a new title at the DMV. With the right documentation, you can get a new title from your state’s DMV. In some cases, you can even apply online for a new title.
While you’ll need a new title regardless, ordering a new title also voids the stolen title. This prevents anyone from using your title in a scam title transfer down the line.
Pro Tip
If your car title was stolen or otherwise defrauded, you may want to check with a lawyer. Depending on what happened, this may be a lawsuit.
What should you do if you lose a car title?
This depends upon when you’ve lost it. If it flew out the window while you drove home from a dealership, you can generally call the dealership and ask them to send a replacement. If it’s been a while, then the process to get a replacement title varies from state to state.
The majority of states will be able to handle a lost title by a trip to the DMV or by reaching out to the Secretary of State’s department. As long as you have the right legal form, you should be able to get your car title.
Key Takeaways
- A car title is an official document that shows ownership. Titles can include a lot of information about a car, including the mileage reading at the time of sale, the lienholder, and if any major damage has occurred.
- Car titles can be “clean” or branded. A clean title indicates that the car has not previously experienced significant damage, while a branded title suggests the opposite.
- Your car title is linked to your vehicle identification number.
- If you want to get a title loan, you’ll need to offer your car title as collateral. This is similar to an auto loan, which uses your car as collateral.
- If your car title is lost or stolen, you can contact your local DMV for a new title.
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