Car titles are an item that we all have some level of familiarity with but probably don’t know much about beyond getting one in the mail after we buy a car. However, these are incredibly important pieces of paperwork; if your title has a problem like a bad brand, your car is worth next to nothing, even if it’s in fine mechanical condition.
But what even is a brand? Why are titles so important, anyway? What do they signify? And does every state have them?
Got title issues? Call us and we'll see if we can help!
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Got title issues? Call us and we'll see if we can help! 🚩🚩🚩
While not every state requires titles across the board (for example, Vermont does not require a title for cars over 15 years of age), most states do, and if you think you’ll cross state lines while moving or changing jobs, you will probably need to have hands on the title to your car. But that’s putting the cart before the horse. Let’s dive into what a title is and exactly how it works.
What Is a Car Title?
In its simplest terms, a car title is a legal instrument used to establish ownership of a vehicle. A title is an official document, so whoever is named on the title is the legal owner in the eyes of the law. Titles are issued by the state, although normally, they may be transferred between two parties (people, dealerships, etc.) without legal representation. Some states do require a notary to be involved with title transfers. Thankfully, my home state of Kansas dropped the requirement for a notary several years back because that was a gigantic pain in the butt.
What Is a Clean Title?
Anyway, a clean title is an optimal condition for your title to be in. That means there are no brands and no restrictions on the title.
A few key components comprise nearly all car titles:
Identification: VIN, make, model, and year. Some states also list color, although cars are repainted often, so this may need to be clarified.
Owner information: The proper name and address of the titled owner.
Title issue date: The date when the current title was issued.
Odometer: Lists the mileage that was on the vehicle the last time it was titled. Mileage is often unknown, which can result in this field saying “Not Actual Miles,” It is not required for certain vehicles, so it might say “Exempt.”
Signatures: Used when reassigning the title to a new owner. Some states still require notaries to participate in this process. Otherwise, ownership is transferred by signature and date only.
Liens and lienholders: Included if the car is on a loan/lien. The financier is on the title, holding it as collateral until the loan is paid in full, unless you use a service like LightStream to get a cash loan to buy the vehicle. In that case, their name won’t appear on the title.
As a LightStream affiliate, we may be compensated if you use their services through the links on this page. LightStream did not commission, sponsor, or fund this post.
A clean car title is generally free of inaccuracies in these departments. It can also be reasonably assumed that the vehicle never suffered any major damage (i.e., it has never been totaled).
I say “reasonably assumed” because there’s always a chance something was missed along the way, especially as a car gets to be decades old. Always run a VIN Report before buying a car to uncover more of the facts than a clean title can tell you.
What Is a Title Brand?
"Car Title" by everycar_listed_photos is licensed under CC BY-SA 2.0.
A title with a known deficiency defect will be marked with a brand that indicates the problem. Some of the most common title brands are “salvage,” “junk,” or “scrap.” These brands are not inclusive, and there are many more, such as “flood,” which are only found in certain states.
Our simple VIN check is the best way to determine if you have any brandings on your title (or a vehicle you are interested in buying). This is separate from the VIN inspections that are sometimes required with title transfers; VIN inspections are usually conducted by law enforcement agencies like the highway patrol or by the DMV. A VIN check will reveal anything that might be on the title before you get into the vehicle, including many issues that can be real headaches with transferring titles. Make sure to check out my story of how a VIN check saved me from buying a problem child truck.
What’s a ‘Lemon Law?’
Lemon laws are enacted in most states to protect car owners from bad titles. Lemon Law is a way to keep people accountable when they sell a vehicle that does not deliver as promised.
"driving a lemon ?" by Digital Sextant is licensed under CC BY-SA 2.0.
But here’s the deal: sometimes, the vehicle isn’t worth the cost of litigation, especially if we’re talking about a sale between two private parties without business involved. There is no certainty that the judge will make the other party cover the costs of litigation (sometimes they do; it happened in my favor once). If the car you bought is only valued at six grand or so, you could easily get in the hole by six grand with legal fees and court costs trying to recoup your money. Laws are only worth something if enforced, and the enforcement of this one is not free.
You may occasionally see a title branded “lemon law buyback”, particularly in California. This generally means the vehicle’s original manufacturer acknowledged defects, it was repurchased, and may have been fixed – attempted fixes may have been carried out – before it was offered for sale again.
Some Common Signs of a Bad Title
Well, the most obvious sign of a bad title are gaps or missing pieces that don’t make sense. A title should be straightforward. In my case, the dead giveaway was that the title said the truck had a 6.8l V-10 gasoline. The truck was a diesel. It physically had a 7.3l Powerstroke. I know for a fact because I test-drove it.
Would this have mattered? Maybe, or not. I didn’t want to find out the hard way that some bored state trooper would dig into this thing and uncover even more problems.
The chances are good that somewhere over time, some DMV clerk either made an assumption or fat-fingered the wrong engine on this truck. Since it changed hands and states several times, who knows when or where it happened? Oh, and not to mention the HUGE gap in odometer readings when it was exempt from odometer readings in Missouri. Once I saw the title's history, my suspicions grew that it was a headache waiting to happen.
These are my personal anecdotes, but they illustrate the sort of problems you can easily run into when researching the title history of a car or truck.
What Is a Lien Holder?
A lienholder is a bank, credit union, or some other sort of financial institution. In other words, it’s the lender.
Instead of putting up some other sort of collateral on the loan, the lender uses the vehicle in the question itself.
"Loan Agreement document with magnifying glass" by wuestenigel is licensed under CC BY 2.0.
Other types of liens exist in rare cases; for example, a garage or repair shop might put a lien on a vehicle for unpaid work.
Why Is the Lender’s Information on the Title?
The lender’s information is on the title to let the DMV know they are the vehicle's owner, not you. However, the title is in your name. But this doesn’t make much difference because the title will not be released to you until the loan is paid off.
What Happens if You Default on a Loan?
If you default on the loan, eventually, the bank will repossess your car. This doesn’t change much for you because you weren’t the owner; the lender was. But you will lose the vehicle when you default, so if you don’t want to lose your whip, stay up to date on payments.
What About Title Washing?
Title washing is basically taking a car with a bad title and running it through a state that has less strict titling requirements, then bringing it back through your state with a “clean” title. Hence the name.
This is, of course, illegal, and you will be in hot water if you get caught. Look, if you have a bad title situation, it’s best to just deal with it directly and get it branded.
What Other Scams Are There?
There are plenty of scams in the car market. Here are the most common examples.
Odometer rollbacks. One of these involves the “not actual mileage” title. This came about because dealers would roll back odometers and then have you sign a waiver stating the mileage was unknown, but they would sell it under the auspices that the mileage was correct, just unknown. That’s pretty low.
Title jumping. Another ethical disaster is title jumping, otherwise known as floating the title. It is where someone buys the vehicle but never puts it into their own name and sells it without ever being on the title. This opens up all sorts of possibilities of impropriety. Like it or not, the title is the legal ledger of the vehicle’s history. Floating the title leaves a gaping hole in history.
Curbstoning. Curbstoning is when a dealer poses as a private party to sell a vehicle. You know you’ve seen these; they are all over the Facebook Marketplace. They often do this to try to hawk a vehicle with a salvage title or some other title brand without the owner knowing the difference. Totally unethical, so beware of your surroundings. Google reviews and Yelp have helped a lot with these sorts of things, so steer clear of used car dealers with bad reviews; they are often earned and deserved.
Parting Thoughts
We usually direct our readers to specific services, but in this case, we want you to understand some of the nuts and bolts and common issues about car titles. If you are having trouble with your title, don’t try to cover up a bad title by going through another state’s DMV; you need to deal with the branding. You never know when the history of that title is going to come back to bite you in the future; paperwork like that has a way of resurfacing.
However, if you are on the buying end, I suggest our VIN check service from personal experience. It was a real lifesaver for me when I looked at trucks earlier this year. There’s only so much a title can tell you – good, bad, or ugly – but a VIN check can offer quick and easy peace of mind that goes beyond what the title has to say.
No matter what task needs to be achieved, there’s always an easy way and a hard way to complete it. Getting your car’s paperwork ironed out is no different.