One of the most important documents you own is the title to your car. Even though it’s not something we think much about, car titles are essential – particularly when it comes to buying or selling a car. Your title offers definitive proof that you are the owner of your car and are legally entitled to sell it.
Transferring a car title isn’t difficult, but it is a legal document requiring certain steps be followed carefully so the transfer is done properly.
While a title transfer is typically carried out when a car is being bought or sold, it may also need to be transferred if your name changes because of marriage or divorce.
Locating the car title
Most of the time, lenders keep the title until the car loan is paid off, then they send you the original document, or for some states, you may receive the lien release. Once you’ve paid off your car loan and have possession of the title, it’s important that you keep your title in a safe place. Since your title is proof of ownership, you need to know where your title is at all times – and you should never keep it in your automobile.
What if you can’t find the title? If you’re going to sell your car and discover you can’t find your title, it’s not the end of the world – but it is going to take some extra steps on your part. If your original title was a paper title, the lender will provide a lien release that can be taken to the Department of Motor Vehicles to get a clear title in your name. (A clear title means the title does not have any outstanding liens or levy.) If your lien was released electronically or you received your title a long time ago but misplaced it, you can go to the Department of Motor Vehicles (DMV) to apply for a duplicate.
Making the transfer of your title
Although transferring a car title to another owner follows the same basic procedures, each state may offer its own nuances to the law. So it’s important to check with your local DMV to make sure you’ve correctly completed all of the required paperwork.
If you are the one buying the car, you’ll either be buying from a dealership or from an individual.
When buying from a dealership. If you’re buying from a dealer, the seller will locate the title for you. If you are paying for the car yourself, the dealer will provide you with the title. If you are financing it, the dealer will send the title to the lender.
When buying from a private seller. Buying from an individual seller can be more complicated. Ideally, the seller will own the car outright, so all you’ll have to do is have that person sign the seller’s section of the title and give you a bill of sale. You should also record the mileage from the odometer. It’s also a good idea to ask the seller for a copy of the title for several reasons: You can verify that they’re the owners and check for additional owners, see if there’s a lien on the vehicle, and also have official documentation of the VIN. You can then take the paperwork to the local DMV and complete the owner transfer.
If you’re financing, you must add the lienholder to the title or have the DMV do so. If no information is provided to the DMV, the title will be issued to the customer without a lienholder listed – which is incorrect, so this must be done. The customer is responsible for completing the transfer of ownership and title; to register the vehicle in his or her name; and pay all taxes and fees.
What to watch out for
It’s very important to check to make sure the vehicle identification number, or VIN, on the paperwork matches the VIN of the car being bought or sold. If you are buying the vehicle, you will be responsible for checking if there are any liens, creditors’ claim against an owner's assets to secure an unpaid debt, on the car. This is usually fairly easy to do by typing the VIN into the website of your local DMV. If you discover there is a lien on the vehicle, find out your state’s specific guidelines for removing it. Please note that not all DMVs have a website. You may need to bring documentation and go to your DMV in person.
If there is a lien on the car, or if the owner has not paid off the loan on the car, you may not want to purchase that car. Or, if you agree to still buy the car with a lien on it, the seller must provide you with the account number, the lienholder’s or the lender’s contact information including their address, and the 10-day payoff amount. You will pay off that amount, and then the transfer can be completed. It’s important you have reliable contact information for the seller of the vehicle and are able to stay in touch with him or her throughout the buying process.
While the process of transferring a title isn’t difficult, it requires a few important steps that can’t be overlooked. Taking time to find out your state’s specific guidelines and double-checking your paperwork as you go will help make it a smooth process for everyone involved.