Part 1: What is a Vehicle’s Title?
You’re interested in buying a car. You know you’llfill out a lot of paperwork at the dealership and need to obtain things like avehicle title, but do you know why? What is a car title anyway?
According to DMV. Org, a vehicle’s certificate of title, aka “car title” or “pink slip,” is thelegal document that proves your ownership. It may include the owner’s name, aswell as any current lien holders. It is typically issued by a state’s secretary via the Department of Motor Vehicles.
When a new person takes over ownership of a vehicle itstitle must be transferred to them. The owner “signs over” the title to thebuyer/new owner.
The following situations require a title transfer:
- Buying or selling a Vehicle
- Removing Lien Info
- Family Transfers
- Donating a Vehicle
- Inheriting a Vehicle
- Making a Name Change
- Gifting a Vehicle
The process for titling a vehicle is relatively straightforwardbut can vary from one car-buyer to another based on where/how their vehicle is being purchased or obtained and in what state it is being registered.
The title certificate looks different from state to state,but includes the same basic information.
This includes the purchase price of the car; owner informationsuch as name and address, the car’s year, vehicle vin number, license platenumber, technical information, make, model and the date on which the car wasfirst sold.
A title can also tell you important information about thevehicle’s history. Major “events” in the life of a car are recorded on thetitle by the owner’s auto insurance company.
When shopping for a used vehicle, it’s ideal to purchasesomething with a “clean title,” which means it hasn’t been in any majoraccidents and has never been declared a “total loss,” by an insurance company.
Buyers should also make sure their vehicle has a “cleartitle,” which means that’s there is no financial lien or levy against it and nocreditors can come out of the woodwork to claim ownership of it.
It’s important to note that because most vehicle purchasesare financed through a bank loan, the certificate of title is normally held bythat lender, to be released to the purchaser once the balance owed on the carhas been paid off.
This is not always the case, however. In our home state ofMaryland for example, the transferred title is sent directly to the purchaser,but the lender’s information appears on that title document. Once the vehicle hasbeen paid off, the lender sends a notarized “release” to the car-owner.
A buyer uses their title to register their newly purchasedvehicle in their state of residence.
When you purchase from a dealership, the dealer willgenerally help handle the car title transfer and registration process for you.
Regardless, it’s useful to know just what to expect from thecar-buying process, as titling a vehicle is just one of the many aspects you’llencounter.
Krietz Auto Blog offers Tips, Advice, and In-depthAutomotive Information for Car-Buyers and Drivers.