All You Need to Know About Car Titles

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  • Post last modified:October 29, 2022
  • Post category:Blog
  • Reading time:7 mins read

A car title, also known as a certificate of title, is a legal document that identifies you as a vehicle owner. The Department of Motor Vehicles issues titles in the state where you buy the vehicle. You need the title to prove the vehicle ownership legally. The title follows the car throughout its life. It’s reissued with each owner and every change of address.

Although the information differs by state, every title contains specific facts. If you buy a vehicle with a lien, the lien holder’s information will be on the title. This guarantees that the debt is settled before the vehicle is sold. The identifying information for the car, like the VIN, model, make, and year will be on the title. The title will also include the license plate number, your name and address, weight class, and the date the vehicle got purchased.

Continue reading to learn about the different types of titles and everything there’s to know about car titles.

Selling or Trading a Vehicle

Selling or Trading a Vehicle

You do not need to do anything when selling a car to a junkyard or trading it to acquire another vehicle. Whether you have a clear title or a lienholder on your title, the dealership will handle any title issues.

For example, if you live in the Philly area and want to sell your junk car in Philadelphia, make sure to find top-rated junk yards in your area. There are many junkyards in Philadelphia, so try to find the one that offers the best service. You need your certificate of title, and the high-paying car scrapers will get you an instant cash offer and pick up your car.

But selling your car to another individual necessitates some effort on your part. First, you must fill out the transfer information if you’ve paid off the vehicle loan and have a clear title. This will include both the buyer and you signing in the required places. Each party should keep a copy.

Types of Car Titles

While car titles are required to prove vehicle ownership, they also contain essential information about the vehicle’s condition. So, if you’re thinking about selling, buying, or refinancing a car, you should understand the various types of titles and what they mean.

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The names of title classifications might differ slightly in different states, and the following are the most commonly used:

Clean Title

This title indicates that the vehicle is structurally good and hasn’t been declared a loss by an insurance company. It means there aren’t any issues with the title or the car itself. A clean title is always attached to a new car, and it’s something you want to look for when shopping for a used vehicle.

Clear Title

This title shows that there isn’t an outstanding financial debt on the vehicle. As a result, it’s the most sought-after car title and, in many states, the only one that qualifies you for a car loan.

Salvage Title

This title is given to a vehicle whose value has significantly reduced due to some accident, theft, or subsequent repair. An insurance company will declare a total loss and issue a salvage title to any vehicle with damage equal to or greater than 75% of its current value.

A salvage title reduces the value of a car, which usually means it’s no longer eligible for financing. Vehicles with this title are legal to use if they pass a safety inspection.

Junk Title

Vehicles sold to junkyards for scrap metal or used parts have this title. Junk titles are treated the same as salvage titles in some states. Unfortunately, cars branded with this title cannot be driven safely due to significant damage. 

Reconstructed or Rebuilt Title

If a salvage vehicle has been extensively repaired and transformed to where it’s safe to drive, the salvage title will be upgraded to reconstructed or rebuilt. The insurance company or the location where the repair took place, like a body shop, collision center, or licensed vehicle rebuilder, will provide this title. If the car passes a safety inspection, driving on public roads is legal.

However, remember that reselling these vehicles can be difficult, and check with your insurance to ensure that rebuilt cars are covered.

Lemon Title

This title is usually assigned to a car undergoing multiple systems or component malfunctions while under warranty. Laws vary by state, but a vehicle that doesn’t meet quality and safety standards can be branded a lemon.

Lemon Title

Wrapping Up

With technology constantly advancing, it’s easy to dismiss the power of paper. However, in the eyes of your state and the majority of insurance companies or lenders, no technology can replace a certificate of title’s impact on your vehicle’s value. So, the information in this document in its traditional form may prove timeless.

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