A car title is one of the most important documents you’ll sign when you purchase a vehicle. It establishes you as the vehicle’s legal owner and is often used to get the vehicle registered in your name and to transfer ownership of it.
The title is issued by the state where you live. And while information included on the document can vary between states, you’ll generally see the following details:
- Vehicle identification number (VIN)
- Year, make, model and color
- Odometer reading
- Owner’s name
- Lienholder
What to know when buying a vehicle
When you purchase a vehicle from a dealership, they typically take care of the title work as part of the vehicle sale. Buying a vehicle out of state might be a little different. In these cases, the dealer might give you the documents to take to your state agency yourself or they may mail it to your local office for you.
Most of us apply for financing when we’re shopping for a new vehicle. When this happens, there are some extra steps involved with the titling process.
In non-title holding states – where the lienholder holds the title until the loan is paid off – once your account is paid off, your lender will send you a lien release, or the original title with the lien marked as satisfied. Most of the states are non-title holding but check with your local motor vehicle office if you’re unsure about your own state.
Some states issue a two-part title – the owner gets a part of the title, and the lienholder gets the other part. If you live in a title holding state, you can expect to receive the owner’s half of the title at the time of your vehicle purchase. Your lienholder receives the other half. When the loan is paid off, both parts together represent a negotiable title.
Many states are now using an electronic car title system called an Electronic Lien and Title (ELT), or e-title. An ELT is simply a stored, electronic record in a database that may be converted to a paper title later. It’s good to check with your local motor vehicle agency to see what your state regulations are.
For financed purchases, the state will send the lienholder an electronic transmission of the title record instead of paper documents. When you pay off your loan, the lender sends an electronic transmission to the state to remove the lien.
Depending on how the state’s electronic title program works, a paper title may be issued and forwarded to the legal owner or the title may remain an electronic record until the owner requests a paper one.
Nearly half of the states currently have either mandatory or voluntary electronic title programs, and more are expected to be added soon. If you are wondering about your own state and would like to learn more, reach out to your local state titling office for more information.
Transferring a title
Your vehicle’s title will likely be needed when it’s time to transfer ownership of the vehicle. There is often an assignment of title section on the back where details including the buyer’s and seller’s names and addresses, date of transfer and signatures are recorded. Some states will use a separate title assignment document for this purpose.
When you sell or trade a vehicle at the dealership, your dealer will take care of the title transfer as part of the paperwork (except, as noted above, for out-of-state transactions). If you’re selling a vehicle privately, however, it’s something you will need to complete with the buyer.
Should you owe money on the vehicle you’re selling, you’ll need to contact your lender to pay off the loan or arrange with the buyer to have the balance paid off within the terms of the sale.
Storing and updating your vehicle title
When you receive your title, be sure to keep it in a safe place so that it’s protected and handy when needed. It’s also important to keep your details updated to avoid any inconvenience or delay on a future transaction.
For instance, if you change your address, contact your motor vehicle agency’s title office to have the address updated. In the event you move to a different state, check whether that state requires you to change your title and, if so, work with your local office to have your title forwarded.
If you receive your title from your lender, one of the most important things you can do is to contact the title office to have the lender removed and a new title issued. By doing so, if the title is ever misplaced, you’ll be able to get a duplicate copy without having to contact your former lender to get a lien release.
Shop for a vehicle
A vehicle title is a key part of the vehicle ownership journey. If you’re at the start of that journey and looking for a vehicle, you can get pre-qualified* with Drive® in about two minutes here, and your pre-qualification won’t impact your credit score. You can find more information about financial wellness and other topics here.
*Pre-qualification subject to approval. Final credit terms are subject to change based on submittal of a credit application at a participating dealer, which may impact your credit.
