A certificate of title is a document that demonstrates ownership of a vehicle. If you buy a used car with a full cash payment, you should immediately be given a signed title to put in your own name. If you buy a car with a loan, you will be sent the title after the final payment. It varies state to state.
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What even is a car title? If you are buying a car for the first time in your life, you may have never realized that every vehicle on the road has a piece of paper (or digital form in some places) that shows to whom the car belongs. This protects the owner (and the state) in case of legal questions.
The title is usually issued by the Secretary of State and/or the Department of Motor Vehicles. Be aware that in some states, the department names differ. Sometimes, for example, it may fall onto the office of public security. The purpose, however, remains largely the same.
What is a Car Title? Here’s the 411
There is a lot to know if you’re asking “What is a car title?” This is especially true if you want to know how to transfer a car title.
A lot of people forget how much paperwork is involved in the sale, purchase, or transfer of a car, particularly when it comes to the title.
The title is a crucial document, though. It’s the legal form that names the owner of the vehicle. This means that nobody else can claim the car. It also means that if a problem arises, like the car is abandoned or caught up in a traffic wreck, the vehicle can be traced back to a responsible party.
The title business runs state to state. This can make things tricky. For example, if you live in Illinois, but you buy a car in Wisconsin, Indiana, Iowa, or Kentucky, you’re going to have to be extra careful about the title transfer process.
The first step would be to check in with the state where the car is currently titled. Are there any liens, fees, or requirements for exit? If you have the title for that car in hand, you can bring it to your local department of motor vehicles (DMV) to assess the process of getting the car title transferred.
Remember, the people at the service counter are your friend, not your enemy. Be nice to them, ask questions, and take notes on what they say. Ask for their name and write it down, too. That way, if there’s a problem later, you can say “Mark told me that this was the required form.”
A few general tips on transferring a car title:
- Be careful if you’re buying a car with a lien against it.
- Ensure all the information on the document (title) is accurate. This includes the Vehicle Identification Number (VIN), make, model, year, and even color in some locales.
- The license plate number must be exactly correct as well.
- There could be specific information on the form, like vehicle weight or class. That must be in order.
- The current (soon to be prior) owner’s information (address, name, etc.) is accurate.
If all of this information is good, and there are no bad problems with the car’s history (stolen, salvage, totaled, etc.), you are said to have “a clean title.” This means the title shouldn’t cause any problems in the title transfer process.
Types of Car Titles
When learning about how to transfer a car title, it may be helpful to review common words used to describe titles.
CLEAN: A clean title means everything is just dandy. There’s no past history or problems with the title.
CLEAR: No debt remains on the car. In other words, all loans and leases are paid.
SALVAGE: This is not for amateurs! A salvage car is one that has been damaged beyond repair. However, that doesn’t mean it can’t be fixed or restored! You will just have a messier title transfer process.
REBUILD/RECONSTRUCTED: Speaking of salvage cars, there are mechanics out there who work their magic, bringing these vehicles back from the grave. When they succeed, the title reads “rebuilt.”
LEMON LAW BUYBACK: Some states offer strong protection against bad cars under so-called Lemon Laws. If this happens, you may see Lemon Law Buyback printed on the title.
Keeping this key vocabulary in mind will help buyers and sellers navigate the murky waters of title transfer processes.
Why is a Title Required for a Car Purchase?
Brushing up on how to transfer a car title, it may be important to note some warning signs and red flags.
Here are questions to ask:
- Is the title legal in my state?
- What is the history report on the VIN?
- Has the document been “title washed?” Has it been doctored or altered to hide something?
Other problems can arise. For example, the title might be lost, stolen, or damaged.
Although panic might set in as soon as you realize the problem at hand, you can rest easy a lost title isn’t the end of the world. There are a couple of solutions you can try before leaving the vehicle to the junk yard.
You can usually head down to the DMV and request a duplicate title. In some states, you can even do the process online.
All you need to do is keep the following information handy: make, model, year, VIN, license information, loan information, etc.
Remember that if your car is financed, you won’t receive the title until the car is paid off. If you want to transfer a car title on a car that requires payments, you need to reach out to the loan service provider for next steps.
Transferring a Title When Selling or Buying a Vehicle
It’s weird to think “how do I transfer a title” if the real question is “How do I sell this car?”
If you’re selling a car, or trading it in, you’re still in essence transferring the title (and the car) to another party.
Be sure to research the value of your car before agreeing to a final price. Then, research your state’s title process. Double check the information is all correct, and sign in the designated place.
If you sign incorrectly, stop. Take the document to the DMV or authorize location and ask about amendment forms. If you don’t have the title, you’ll need to request a duplicate title.
Use your best handwriting! This is a legal document after all.
Scan a copy of the signed title before handing it off to the buyer. You never know when you’ll want to prove that the car is no longer in your name.
A Word on Title Jumping
What is title jumping? It’s a bad activity that you need to know about if you’re dealing with a car title transfer.
Title jumping occurs if a car buyer doesn’t sign/process the new title. Instead, the next buyer signs the title. In essence, a buyer/driver is skipped (or jumped).
The IRS says this is illegal. The state needs to know who owned the car and for how long. If they cannot identify all the owners, this could create problems down the line.
Avoid transactions with people who like to title jump.
Can I Sign a Title over to Somebody?
In the most basic of situations, yes. If the title is clean and clear, without issues, then the transaction may simply require two signatures: the seller’s and the buyer’s.
The DMV handles the rest. If there are problems, the DMV staff should be able to assist you in finding the right forms. The DMV employees have a bad reputation, but many states are fighting to change this. General advice: be firm and persistent in finding the information you need.
Car Title Transfer as a Gift
You might have the idea of selling your car to a family member. That’s fine. However, be careful not to GIVE IT to your family member. Gifts of vehicles require taxes to be paid in some situations. However, when you sell the car, even for $1.00, this bypasses the law.
This isn’t legal advice; it’s just a work around we have heard some people have used with success. Check with a lawyer if you have questions.
Summary: Transfer the Title for a Car Step by Step
Understanding the ins and outs of how to transfer a car title is not always easy. A step-by-step guide can help.
Fun Fact: If you’re worried about transferring a loan balance, that can be done! The credit of the new party is an important factor to consider. To make this move, contact the finance provider.
Remember that the car title proves ownership. In some states, people call this document a “pink slip,” although it’s not always pink!
The idea behind the paper is that the state where you live catalogues all of the cars on the road. Each car is documented, registered, labeled, plated, and tracked.
This is done for a variety of reasons. One is to help citizens protect themselves. The labeling also protects the state (no abandoned cars, accurately paid taxes, safety reports and inspections, etc.).
Steps
- The seller of the vehicle gives up ownership by signing the title in the designated space.
- The buyer then takes the title and signs it (in some cases – check your state’s regulations).
- The buyer takes the signed title to the DMV to complete the process.
- Some states will require additional tasks such as getting a smog inspection or vehicle emissions test. Others will require the buyer to go to a tax office to pay a tax.
There can be other problems to consider.
For example, sometimes family members must sell a car because the owner has passed away. This requires special paperwork to show why the deceased person didn’t sign the document.
If two people are on the title, which is common in families, both signatures are usually required.
Title Transfers for the Junkyard
Most cases of a junkyard sale do require a title in hand at the time of the transaction. However, there are junkyards that will take a car without a title. In general, these cars will not be resold or fixed up. They will be taken apart for scrap.
Since the car won’t be sold again, the title isn’t that important.
There are plenty of cases where a junkyard call makes more sense. If your car is very old, not drivable, or stalled, you could sell the car to the junkyard.
If the junkyard will take your car without a title, and you don’t have one, sending the car off may be the easiest (and most affordable) option.
Transferring a car title is a straightforward process (until it isn’t). The basic setup is easy. The seller signs, and the buyer takes the document to the department of motor vehicles to finish the process.
Pro tip: In some states, like Illinois, you can skip the DMV by heading to the Currency Exchange. The establishment charges a small fee, but you can often get faster answers and spend less time waiting in line. You should also see what processes you can do on the Internet before heading down to the offices.
With a little homework, though, you’ll be ready for the bumps in the road.