You may have heard the saying, “You can’t tell the players without a program.” When it comes to the ownership of a car, its certificate of title is that program. For interested parties, such as the government and potential buyers, a title identifies the vehicle and its owners, present and past. Basically, the title is a vehicle’s birth certificate, Social Security number, and passport rolled into one document.
A document required to buy or sell a vehicle, the title is the most important document attached to your car.
A car title is a legal document establishing proof of ownership of a vehicle. Issued by the state where the car, truck, or SUV got purchased, the title accompanies the vehicle throughout its life.
It’s reissued with each new owner and any new state of residence.
Looking every bit like a car’s birth certificate, the title will include the seal of the issuing state. Although the information displayed on a title varies by state, generally, every title includes certain facts.
A seller scamming the system isn’t unheard of. It’s up to you to ensure the title the seller presents is indeed a legal title. There are some things you can look for and do to avoid being duped.
In terms of a title, buying a new car is a no-brainer. The dealer takes care of all things title-related. You will pay whatever fees are involved, but the dealer deals with the paperwork.
When you buy a car, you either pay cash, lease, or finance. Only when you pay cash will you receive the original title. And, processing it might take as long as 30 days. Leasing a car is glorified renting. You never receive the actual title because the car never belongs to you.
When you finance a vehicle, you will receive a copy of the title within 90 days. It will identify the lender as a lienholder. When you’ve paid the loan in full, you will receive the actual title reflecting you as the owner free and clear.
You don’t need to do anything when selling a car to a dealership or trading it in as part of the transaction for acquiring another vehicle. Whether you own a clear title or your title has a lienholder, the dealership will handle any title issues.
Selling your car to another private individual, however, requires some effort from you. If you’ve satisfied the vehicle loan and have a free-and-clear title, you only need to fill in the transfer information. This includes you and the buyer signing in the appropriate places. Both parties should keep a copy.
Note: Some states require the signatures to be notarized. As part of this transaction, you will also need a bill of sale. You and the buyer should keep copies with the signatures of both parties. Unless you know the buyer, accept only cash or a cashier’s check as payment.
If you still owe money on the vehicle and a lien is on the title, things just got more complicated. The lender will want the loan paid off to release the lien. At this point, the easiest way forward is to complete the entire transaction at the lender’s offices. If it’s a local bank or credit union, everything can be done right then and there. You will need to make arrangements with your lender.
If completing the transfer at the lender’s location isn’t possible, the lender will still want the loan paid in full before transferring the vehicle. You will have to hammer this out with the buyer. The best way forward, in this case, is for the buyer to pay your lender. The lender will issue you a clear title, and you can proceed with the transfer.
Don’t panic if your title turns up missing. There will be a fee, but you can replace it. You can apply for the replacement online, but we recommend going to your local Department of Motor Vehicles (DMV) branch. In-person is better. First, go to your state’s DMV website to see exactly what information and documents you need to take. But, usually, the list includes:
To replace a lost title, check out this resource from Finance and Insurance Tools. It provides the links to state applications for replacement titles plus the cost. According to the F&I, the cost will range from $2 to 95, depending on the state where you live.
RELATED STORIES: How to Sell a Car Without a Title
Every state has its own rules concerning car titles. Your life will probably be much easier, in the long run, to keep up with changes as they happen. That means getting an updated title when relocating to a new state or when the vehicle changes hands. That’s true even when the vehicle moves from one family member to another.
As if you don’t have enough on your plate when moving to a new state, add registering and re-titling your car to the mix. States have their own timetables for making your car legal in its new home, but 30 days is a good place to start.
Some states require an emissions test or a safety inspection or both to title and register an out-of-state vehicle. Many require a physical VIN verification, as well. It’s up to you to determine what is necessary for your new home.
If you come from a state that issues titles, take your current title to the local DMV or Department of Transportation office. Additionally, you’ll need your driver’s license, the current odometer reading, proof of residence (electric bill, apartment lease, and so forth), and a form of payment. If your new state requires any of the tests mentioned above, you’ll need proof of passing those.
Some states like Vermont don’t require titles for cars more than 15-years-old. If you are coming from a state that doesn’t issue titles, you will need your current registration, financing paperwork, and all the other documentation listed in the last paragraph.
RELATED STORIES: Buying a Car From Out of State
Although it makes sense that transferring title to a family member would somehow be easier, the process is the same as with an outside buyer. This is so, whether the title is clear or if there is a lienholder.
If it’s clear, fill out the required information on the current title and sign where appropriate. If the state requires a bill of sale, it must be completed, even in the case of a gift. The family member then applies for a new title.
If there is a lien, the lender will require payment before clearing the lien.
The title transfer process is the same with two owners as it is with one. That is, with one possible exception. It’s the difference between “or” and “and.”
If “or” separates the two owners’ names, either owner can legally sign the title transfer. If “and” separates the two names, the signatures of both owners are required for the title transfer.
There are at least 18 types of car titles. As a private-party car owner, you’ll never come in contact with most of them.
The difference between a car title and car registration is that a title proves ownership, while a car’s registration allows a vehicle to be legally driven.
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