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Car titles often create confusion for people who are thinking about buying, selling, donating, or otherwise transferring car ownership. What is a car title? How does it work? Do you even need one?

All of these questions can stall an already lengthy and complicated process. To help you get started and avoid unnecessary problems, here’s everything we think you should know about car titles.

What Is a Car Title?

Before you can determine whether or not a car title is something you need, you should probably understand what a car title is. A car title (or certificate of title) isn’t the same thing as vehicle registration. It’s a legal document that proves who owns the car and what condition it was in when it was purchased.

It also contains specifications like the make, model, and year of the car and other unique identification details. You can find a complete list of these possible specifications here.

Think about a car title like the vehicular version of a deed of trust. To avoid potential legal repercussions when buying or selling a home, a deed of trust is your best asset because it shows the full ownership history of the property. A car title works the same way for a vehicle.

What Are the Types of Car Titles?

Although the car title travels with its vehicle throughout its life-cycle, that title is classified differently based on its vehicle’s history. Most dealerships, government agencies, and insurance providers recognize 4 types of car titles.

Clean Title

Brand-new cars (i.e. ones that have never been sold) are issued a vehicle title by the Department of Motor Vehicles (DMV) called the clean title. Clean titles are also issued to previously owned cars that have never incurred serious damage from a wreck or other incident. Note that this doesn’t mean a car with a clean title has never been an accident—it only means that the car has never been salvaged.

Clear Title

Another type of title given to new vehicles is a clear title. A clean title describes a car’s accident history, but a clear title describes its financial history.

Usually, a brand-new car will have both. A clear title indicates that the vehicle has a single, definitive owner and no loan agencies have ever repossessed it.

Salvage Title

Cars that have experienced significant damage are usually given a salvage title. A salvage title is always a cause for concern because it means that the vehicle cannot be driven in its current state. Unethical sellers may try to list a car at an exorbitantly low price to distract potential buyers from the title status.

Rebuilt/Reconstructed Title

Used cars that have been sufficiently repaired after an accident are issued a rebuilt/reconstructed title. Like clean titles and clear titles, this type of vehicle title is a good sign for prospective buyers.

In order to receive a rebuilt/reconstructed title, the car must be evaluated by a state professional. This removes the possibility of obtaining an unusable car.

Why Do You Need a Car Title?

Proof of Ownership

As mentioned previously, the main benefit of having a car title is that it definitively proves who owns the vehicle to which it’s attached. This is especially useful for people who want to sell, donate, or otherwise give away their car. If that car is involved in an accident and the title doesn’t reflect its new owner, then the seller will be liable for paying that car’s insurance and any other fees associated with the wreck.

Vehicle History

Car titles are equally useful for vehicle buyers and inheritors. Anytime you purchase a vehicle, whether it’s new or used, you should know that vehicle’s condition and history. Without a car title, you run the risk of getting a car that looks operable but is actually a death-trap on wheels.

Car titles can also protect you against paying ridiculously high insurance premiums. Older model cars typically have higher insurance rates, but, if your title proves that the car has never been driven or totaled, you can usually get a lower rate.

(On the flip side, a rebuilt/reconstructed car title may cause you to pay a higher rate. For the aforementioned reasons, though, it’s still a good idea to get a title whenever you buy a car.)

Potential Alibi

Finally, it’s a good idea to have a car title to serve as a legally binding alibi. In the unlikely event that a vehicle you recently sold or bought is related to a serious crime like kidnapping or murder, you’ll want to have proof that you had no relationship with that car when the crime occurred.

Buyers will have the ownership history at the ready, giving them quick access to evidence that will clear their names. Sellers will usually not have a physical copy of the title on hand, but, because titles have to be registered via the DMV, they are also protected from this kind of incident.

What If You Don’t Have a Car Title?

If you don’t have a car title, you aren’t necessarily out of luck. There are several places that buy cars without title, both online and in-person. These same places usually allow sellers without a title on record to get rid of their cars for cash.

Although we still recommend getting a car title, these are great alternatives for professional vehicle dealers and people who neither have the time nor the ability to track down a car’s official history.

Where Can You Get a Car Title?

If you aren’t sure whether or not your car has a title or you simply can’t find it, you can visit your local DMV or check an auto insurance website like Direct Auto. Both will usually have at least a basic history for your vehicle on file.

What Happens Next?

Regardless of whether or not you purchased a title for your car, the next best step for buyers is to make sure that the car is insured. Wrecks and other accidents are not inevitable, and many people go their whole lives without having any, but, as we’ve hopefully proven in this article, it’s always better to be prepared.

If you want more answers to questions like, “What is a car title?”, “Where can I get auto insurance?”, and other must-know details about day-to-day life, visit our contact page. We’d love to help you out.