MoneyLife

What Is a Car Title?

By Anna Yen
what is a car title

When you buy a car, one of the most important pieces of paperwork that you’ll acquire is the car title. This legal document proves that you are the owner of the vehicle. And if you want to sell or register your vehicle, you’ll need to have the car title with you. 

But beyond declaring you the legal owner of a vehicle, what is a car title? And how does it work? We’ll go over the answers to these questions and others today! 

How do car titles work?

A car title is proof that a vehicle is yours. Depending on the state you live in, either the Department of Motor Vehicles (DMV) or the Department of Transportation (DOT) will issue a title to you at the time of sale of your vehicle. Make sure you keep your title safe! 

How important is a car title?

Your car title is crucial to proving ownership. You may need to show your title if the following circumstances arise:

  • Someone stole your car.
  • Your vehicle is impounded.
  • The vehicle is used to commit a crime. 
  • You want to sell your vehicle. 

Is a car title and registration the same thing?

Your car title and registration are not the same. The title proves who owns the vehicle. Registration is proof that your state has validated your vehicle’s roadworthiness. 

How do you transfer the title of a car?

If you want to perform a transfer of titles, you can use the Vehicle Assignment section on your title to sign the car over to someone else. Both parties will need to provide the following information: 

  • Their names and addresses
  • The purchase price and date
  • The odometer reading 

Some states also require you to notarize the change of car ownership and provide a bill of sale. 

Who keeps the title to a car?

If you own your vehicle outright, then you’ll get to keep your car title. But if you used a loan to purchase the title, then the bank technically owns your vehicle until you pay off your loan. 

As such, some states let the bank keep your car title until your debt is paid, while others issue titles directly to the registered owner regardless of the loan status. It all depends on your location. 

What happens to the title when the car is paid off?

If you finance your new car, then your lienholder may keep the car title till you pay it off. Depending on the state you reside in or purchase the car from, you may need to reapply for a new title within 30 days of acquiring the car. 

Which states hold vehicle titles?

In a title-holding state, the title is issued to the registered car operator regardless of the loan status. Currently, only nine states are considered title-holding states: 

  • Kentucky
  • Maryland
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • New York
  • Oklahoma
  • Wisconsin

Car title vs registration 

Your car title is proof that you own your car. In contrast, your registration certifies that your vehicle is legally permitted to be driven on public roads. You need both a title and registration to drive your vehicle, though you may have to pay fees for both. 

If you need help affording these fees, InstacashSM can help. With a short-term, no-interest cash advance, you can get up to $250, which can help you cover the costs of your car title and registration!

Type of car titles

You may have heard that there are different types of car titles. The two types of car titles include a rebuilt car title and a salvage title. But what is a rebuilt car title and what is a salvage title? Let’s explore! 

Clean car title

A clean title shows that a car has never been in an accident that required the car to be totaled.

Clear car title

A clear car title indicates that the owner owns the vehicle outright.

Salvage car title

A salvage title shows that either an insurance company or the state has declared that the vehicle is a total loss. In some states, cars with salvage titles can’t be sold. 

Rebuilt car title

A rebuilt or constituted title is issued when a car was a salvage vehicle but it has since been repaired. Rebuilt vehicles may still require work, and the cost of insurance may be higher, too. 

Factors involved with car titles

Before we discuss how to get a car title, you’ll need to know a few more facts about car titles. 

What’s on a car title?

A car title contains important information, including the following:

  • Owner’s name
  • Vehicle identification number (VIN)
  • Weight class and color
  • Odometer reading at the time of sale
  • A car title transfer to change ownership of the car

However, the exact information contained by a title will vary by state. 

Are car titles paper or electronic?

Many states use paper titles, and it’s easy to misplace a physical copy of a title, so it’s important to keep the physical copy of your title in a safe place. But around half of all states use electronic systems to store your car title instead.  

Credit scores and car titles

In most cases, you do need a credit score to get a car title. Your credit score won’t affect your car title, though it can impact your car insurance coverage and your ability to buy a car in the first place. 

How to get a car title in 4 easy ways!

There are several ways to get a car title, but the way you go about getting a car title will depend on your circumstances. 

1. If you buy a new car or transfer to a new state

If you buy a car or transfer to a new state, getting a title is easy. Simply apply for a certificate of title, which you can usually download from your DMV website. Fill out the application paperwork and bring it to the DMV. You’ll want to bring the following information with you, too: 

  • A driver’s license or passport
  • Proof of ownership such as a bill of sale 
  • Proof of insurance
  • Applicable fees

Depending on your state, you may then receive either a paper title or an electronic title. 

2. If you buy private party

If you buy a car from a private party, they should provide the title at the time of sale for a car title transfer. But if they still owe money on the car, you’ll need to contact their lienholder. 

3. If you’ve paid off your loan

When you pay off your loan, your lienholder should send you a copy of the title. In some states, you may need to apply for a new title online. 

4. If you lose your title

If you lose your title, you can apply for a new one by filling out or downloading a lost or duplicate title application from the DMV or DOT website. Then, submit your application online, by mail, or in person, along with your fee, ID, or proof of notarization.  

Having a car title is one step toward financial freedom

Having a car title in hand, rather than leasing a car or taking an Uber, is a step towards becoming financially free. But if you’re ready to go one step further, a RoarMoneySM account for $1 per month can help. With direct deposits, you can bolster your safety net, qualify for Instacash loans, and even build your credit from the ground up with a Credit Builder Plus membership for $19.99/month! MoneyLion options are limitless!

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