Definition and example of a vehicle title
How does a vehicle title work?
Types of vehicle titles
How to obtain a vehicle title or transfer it
Definition and example of a vehicle title
A vehicle title is a legal document that proves ownership of the vehicle and contains other important information, including the Vehicle Identification Number (VIN). The title can be a physical document or an electronic one.
How does a vehicle title work?
A vehicle title verifies the ownership of the vehicle, which is important if:
- Your car has been stolen
- You want to sell your car
- Your car has been impounded
- The vehicle was used in a crime before you owned it or after you sold it
When purchasing a new car from a dealer, the dealer typically handles the process of obtaining the title, as well as registration and license plates. A fee will be charged for this service and should be disclosed as part of the purchase price.
If you buy a car from a private seller, you will have to handle this process yourself.
If you have a car loan, the title certificate is usually held by the lender until the vehicle is paid off. Sometimes, the title is sent to the buyer who currently owns the car, but the lender’s name will be listed on the title.
As of September 2020, 24 states participated in the Electronic Lien and Title (ELT) program. These systems allow state motor vehicle agencies to provide digital titles to car owners and enable lenders to share lien information about vehicles with state agencies.
Types of vehicle titles
You can see four designations applied to a vehicle title: Clean, Clear, Salvage, and Rebuilt.
- Clean: The vehicle has not been involved in a major accident that resulted in the car being considered “salvage” by an insurance company.
- Clear: There is no lien on the vehicle, and the owner owns it free and clear.
- Salvage: The car has been deemed a total loss. When a salvage title is issued, the state often declares that the vehicle cannot be driven or sold in its current state.
- Rebuilt or Reconstructed: A title for a salvaged vehicle that has been repaired. The vehicle may be in good condition, or it may have been repaired cheaply and may need additional repairs in the future.
The first two designations are positive, but you should avoid a car with either of the latter two designations. For example, a car with a rebuilt title may be inexpensive, but the cost to insure the vehicle is often much higher than insuring a car with a clean title.
How to obtain a vehicle title or transfer it
The title will have a section allowing the buyer and seller of the vehicle to provide detailed information about the change of ownership. Typically, the parties will need to provide:
- Their full names and addresses
- The purchase price
- The date of purchase
- The odometer reading
The buyer will need to provide information about their lender, if applicable. Both the seller and buyer must sign the document.
The seller should keep copies of the signed title and the bill of sale for legal protection.
Some states require notarization to transfer the title, and state laws vary regarding how to correct something written incorrectly on the title.
Some states require obtaining a copy of the original title and starting the process over. Other states allow you to draw a line through the incorrect information and write the correct details above, but you may be required to fill out a form explaining the nature of the mistake.
The buyer is ultimately responsible for obtaining a new title in their name from the state where they reside, and they should determine the necessary information and steps by consulting their state’s Department of Motor Vehicles website. The buyer should receive a bill of sale from the seller and a copy of the signed title.
The buyer should verify that the VIN on the title matches the VIN on the vehicle itself. They should also check their state’s online vehicle database to ensure there are no liens on the vehicle that the seller did not disclose.
Source:
https://www.thebalancemoney.com/what-is-the-title-of-a-car-4049167
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