Not fully understanding what a car title is, why it is important, and how to transfer it can cause a lot of headaches during the car-buying process. This is especially true if you’re buying or selling a car privately. So what is a car title and how does the car title transfer process work? We have the important information to help streamline the process for you.
What Is a Car Title?In short, a vehicle title is a legal document that proves valid ownership. Without a title, a car cannot be registered with the Department of Motor Vehicles ( DMV ). And if a car cannot be registered, it won’t be issued license plates , which means that it cannot be legally driven.
This is why the title is the most important piece of documentation you have for your car. If you plan on selling your car on the private market, ensure that you have the title in your records. If you find that you’ve lost the title, follow the steps outlined by your local DMV to be issued a replacement before putting the car on the market. It will make the selling process go much quicker and easier.
Should I Buy a Car Without a Title?In most instances, the answer is no. Though the exact process of car registration varies from state to state, it’s common across all states that having the title on hand when going to register your newly purchased car is a lot easier, faster, and more straightforward, not to mention cheaper, than if you didn’t have the title.
If you do buy a car without a title, expect to complete and submit additional documents, possibly get additional inspections for things like smog and safety, and spend a lot of time waiting for all this paperwork to be processed by the DMV. It’s a long, slow, painful process - and it all can be avoided if you buy a car from someone who didn’t lose the title.
It’s worth noting that the process varies by state. Connecticut, for instance, does not require a title for registering any car over 20 years old. On the other hand, if you buy any car without a title in California you’ll first need the previous owner to fill out a request for title and have it notarized. The new owner will then pay the appropriate DMV fees and also get a safety and smog check. Only after completing this process can you get a new title from the state.
To avoid having to negotiate the state-specific DMV rules, forms, and regulations relating to no-title sales, make sure any car you intend to purchase has a “clean"title. This means the title show’s the current owner’s name and it has no loans/liens against it. If they don’t, you should probably walk away, as the difficulties that could arise when you attempt to register it might prove incredibly frustrating and time-consuming - not to mention pricey.
A vehicle title with a lien against it means there’s currently a loan using the vehicle for collateral. This means the seller has to pay off the loan before the lien comes off and the title is “clear”. The process isn’t too complicated, and can be done as part of the purchase with the seller’s and lending institution’s cooperation. See below for additional details regarding how a seller transfers a car title when there is a lien on it.
When a vehicle owner doesn’t have a car title, it can raise many red flags. It could be because the vehicle was stolen or has a salvage title. Alternatively, it could be because it was simply lost. To confirm that it is an honest sale, you can run a free VIN check. The iSeeCars VIN check provides title/lien info that comes from the state’s DMV, and also links to a CARFAX or Autocheck vehicle history report that will show if the vehicle has a salvage title. It will also tell you if the vehicle has been reported stolen on the National Insurance Crime Bureau (NICB) database.
How Does the Title Transfer Process Work?The process of transferring a title begins when the car is purchased. At that time the seller will complete and sign the appropriate sections on the car title itself. The buyer will also sign the title. There’s also a place to write in the mileage shown during the odometer reading at the time of sale. The new owner information is usually found on the back of the title .
This is also when a bill of sale should be written out. A bill of sale is like a receipt; it is a legal document stating that you purchased a certain product or service from another. It usually doesn’t have to be anything formal - in this case, just a couple of sentences disclosing the buyer’s name and contact information, the year, make, model, and VIN (vehicle identification number) of the car sold, and the date of sale and purchase price. This isn’t required by every state, so check first with your local DMV before preparing one. If you need it, bill of sale templates are available for free online.
In some states, like Maryland, the bill of sale must be notarized under the following conditions:
- The vehicle is less than 7 model years old; and
- The price is at least $500 below book value; and
- The new owner wishes to pay the excise tax based on the sale price
Is It Really That Easy?Well, that’s the general process. As noted earlier, each state is different with their exact criteria required for issuing a title. Before you go to your local DMV , check their website to ensure you bring everything you need to transfer the title into your name.
The process can be slightly more complex in different scenarios. For instance, the process of titling a car that is inherited, gifted, or transferred to another family member may differ from the ordinary transaction between unrelated buyers and sellers. Another example would be if a vehicle was awarded in a divorce, which would require a certified copy of the divorce decree. These unique situations may require you to bring additional paperwork and complete specific forms. If you can’t handle the transaction yourself, you can use a power of attorney to let someone act on your behalf. One instance when this can occur would be if you moved away and cannot be in person during the vehicle transfer of ownership.
As mentioned above, if you’re still paying off your car loan when you decide to sell it, you’ll need to work with the lender before proceeding with any sort of title transfer. Generally, you’ll end up getting an official payoff letter that shows the payoff amount, which is how much you’ll pay in a lump sum to satisfy the loan terms and have the lienholder release the title. You’ll then apply for a new title, furnishing the DMV with a completed title application, official documentation of the lien release, and payment for any fees. Once the DMV mails you a clean title in your name you can proceed with selling the car, or you can work with the seller to have them help you pay off the card during the purchase process. This is a more complex process and will require the buyer and seller to work with the lending institution to transfer the title.
How Do I Register My New Car?Transferring a title is only part of the vehicle registration process. To get a new registration for your vehicle you’ll also need your driver’s license , your insurance identification card , and completed registration documents. You’ll also be required to pay any sales tax and registration fees that may be due. And depending on the state you live in, you might have to first pass smog, safety, or emissions tests - or maybe all three - before your state will let you complete registration.
What If I Buy From a Dealership?
A dealership will likely handle much, if not all, of the documentation - for a fee, of course. If it’s a new car, they’ll begin the process of having an original title issued in your name. It’s not much different for a used car, though depending on the state the old title may be in the dealer’s name or in the prior owner’s name.
A dealer may charge anywhere from $100 to $500 for this title fee service - so be sure to closely read the contracts and agreements they have you sign during the paperwork session. If you want to save money, don’t be afraid to tell them that you’ll handle the titling and registration process yourself. It will cost significantly less to do it yourself, though you’ll be using the DMV and likely waiting in one or more lines for what could be hours, so you might want to pay the dealer to process the title transfer.
What If I Lose My Car Title?If you can’t locate your car’s title, it’s a good idea to order a replacement title (also known as a duplicate title ). Most states allow you to order a replacement through the DMV office. Make sure you reference your state’s DMV website to see what you’ll need to complete the process. Most will require proof of ownership , the car’s VIN , and other identifying information. You will also likely pay a small fee. In Massachusetts, the fee is $25.
What If I Move to a New State?If you move to a new state, but your car is registered in your old state of residence, you may need to retitle your vehicle. While some states will allow you to register your car in a new state with an out-of- state title , other states will require you to title the car in your home state. Even if it isn’t required, transferring your title to your new state will streamline the process should you choose to sell your vehicle in the future.
The Bottom LineWhether you’re buying from a dealer or a private party, or from across the country or just from down the street, you’ll need to deal with transferring the title into your name and registering the car with your local DMV .
Because the rules differ from state to state, the best advice we can give you is to do your homework. Before you buy a motor vehicle, you should know exactly what state’s DMV requires. That might mean a verified odometer disclosure statement, a vehicle identification number (VIN) certification, or a smog check. Whatever it is, understand these requirements beforehand. It could give you a leg up when it comes time to haggle - or you’ll know to run away from a car with a messy title situation. Also, it’s worth noting that you should store your title in a safe place outside of your vehicle. Never store in your glove compartment, as it would allow a thief all the information required to sell your car.
More from iSeeCars:
- What is a Salvage Title?
- Buying a Car Out of State: What You Should Know
- How Many Miles Should a Used Car Have?