Buying a Car Without a Title - What You Need to Know
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Buying a Car Without a Title - What You Need to Know

By Evan Walton | June 7, 2021

Imagine you've searched for the perfect car and finally found it. The price is right, but there's one catch: The seller does not have the title to the vehicle. That sounds like a significant hurdle in the path to buying the car.

To become the vehicle's registered owner, you will need the title since the title proves your ownership during registration. If you can't register the car, you can't get it insured and drive it legally. It's fixable, but there are several steps to take to make sure the vehicle is lawfully yours and there won't be problems registering and insuring it. Here's what you can do to fix this situation.

Why is the Title Missing?

There are a few reasons why the seller of the car may not have the title. Some of them are legitimate reasons, while others may be downright criminal. In any case, however, it should raise a flag.

The seller could have misplaced the seller, or it could have been damaged or destroyed. That's a relatively simple fix that they can remedy at the Department of Motor Vehicles (DMV) or similar vehicle authority in the state where the vehicle is currently registered.

But the title could have been stolen, or the vehicle itself could be stolen. A missing title could also indicate that the car has sustained significant water damage and branded by an insurance company as a flood car in a specific state. Some vehicles have salvage titles, but that encompasses a broad range of conditions and isn't immediately a warning sign.

Another possibility is that the seller is participating in what is known as title jumping. That involves two or more individuals selling cars without going through the title process, generally to avoid the payment of sales tax. Title jumping affects buyers by making it difficult to reach the seller and obtain a complete vehicle history report. It ultimately makes it almost impossible to transfer the title into the buyer's name. The practice of title jumping is illegal in every state, but it still happens.

Before moving forward with purchasing a missing titled vehicle, make sure that you are confident with the seller's reasoning as to why the title is missing. Verifying reasons for a lost title is a way to safeguard yourself as the buyer in both your time and money.

Check the Vehicle's History

The vehicle identification number (VIN) on a car is crucial in finding out its history. Services such as AutoCheck and Carfax can help confirm through a vehicle history report the legal title status of the vehicle, including the places where it has been registered before. These services also provide information about the odometer readings, previous incident reports, insurance claims associated with the VIN, and even service records.

If the vehicle has insurance claims and accidents reported, request service records from the seller to ensure the work done on the car was by a reputable shop. If you run a report and find information contrary to what the seller gives, you might want to look for another vehicle.

Check With the Previous Owner

If the seller has a bill of sale from the previous owner of the car, use it to track the person down online or in-person based on the information on the paperwork. Ask the previous owner to help you obtain a title for the car, and offer to pay any costs incurred in doing so.

If the previous owner is willing to aid you in this process, this could be the quickest way to obtain a new title. The majority of the time, if the vehicle is sold is a legitimate sale, all parties are happy to make the process easier as the buyer.

Check With the DMV

A local DMV or vehicle registration office may answer some basic questions about the car in question by running a VIN search. You can uncover information about the vehicle's history in your state based on a search on recent ownership of the car. You can also confirm the status of the vehicle's title with a DMV clerk. However, keep in mind that the information a vehicle agency can give you is limited, and they will not share things such as names and addresses.

The DMV can inform you if there are any current liens on the vehicle. If you purchase a car with no title with a lien on it, the lending institution can come after you for the remainder of the loan agreement. If you find a lien on the vehicle you are interested in, contact both the seller and the lien-holding institution before continuing with your purchase.

Check the National Insurance Crime Bureau (NICB)

The NICB offers a free VINCheck service to help the public determine the legal status of a vehicle. The service will determine if the vehicle has been stolen and has not yet been recovered by law enforcement. It can also alert you whether the vehicle has been reported as a salvage or junk car by an insurance company.

Running the VIN through the NICB system will help prevent any legal issues for you as the buyer if you are pulled over by law enforcement. Not only will this create a complicated legal situation for you, but there's also no assurance your money given to the seller for the car will be recovered, and authorities will seize the vehicle.

If everything seems to check out, then you may decide to proceed with the sale. At this point, you have a few more steps to take:

Have the seller request a duplicate title

Although the form you'll need to fill out varies by state, the seller can submit a request for a duplicate title from the DMV. They will need to provide the name and address of the titleholder, the VIN for the car, the car's mileage, and offer proof of ownership. It will take a few days for the duplicate title request to be processed and a new title issued. If the information provided by the seller is false or inaccurate, then it can result in a rejection of the new title. It is best practice to delay the purchase until the new title is in the seller's hands.

Complete a Bill of Sale

If you don't want to wait for the new title to arrive, you might want to complete a bill of sale. The Bill of Sale is an essential part of the sales process for any vehicle sale, but it is undoubtedly crucial if there is no title for the seller to hand over. Before you pay for the car, write out a Bill of Sale that includes the sale's details, including the VIN, sale price, and the car's odometer reading. Be sure to include that the seller will supply the title on the bill of sale and have complete information on yourself and the seller. That consists of all contact information, including full legal names, driver's licenses, addresses, and phone numbers.

If using a bill of sale, ensure that you pay the seller with a method that can be easily proven later on. Use a check or bank draft to pay for the vehicle, as these are written records of the purchase and can be used later to prove your purchase. Alternatively, you can make a sales agreement that places the vehicle funds in escrow until the terms of the sale are met.

Go for a surety bond title

Surety bond titles are not available in all states, but it generally requires submitting proof of purchase and residency and proof that the car is not a salvaged vehicle. The bond company will also need a vehicle valuation to determine the amount of the bond. Once the surety bond company verifies everything, you pay a percentage of the bond amount.

The bond amount varies from state to state but is usually no more than 1.5 times the vehicle's value. The bond price will vary depending on the amount, your credit score, and other financial histories.

A bonded title indication can be removed from the title within three to five years, provided no issues arise with the title bond in the interim. During this time frame, other individuals can challenge your ownership of the vehicle which will cause litigation. Keep copies of all paperwork during your purchase transaction for the three to five years after the vehicle purchase. After the waiting period, you can get a clean title in most cases and register the title in your name.

Register the vehicle in your name

Once you have completed the purchase of a vehicle, make sure to register the car in your name promptly. Some states let a resident to register a new vehicle without the title, but the majority require the title. A state vehicle agency may issue a non-transferable registration. It means that the car is registered in the state and you can use the vehicle for personal use, but it cannot be sold to another person with this status.

Paperwork required for vehicle registration and title transfer can be found on your state's vehicle registration agency's website or by visiting a local office or contacting the state office by phone. It's worth speaking to someone in person or over the phone to ensure all of the required information is present.

Points to Consider

Before deciding to purchase a motor vehicle without a title, it is important to remember that, in most states, it is illegal to buy or sell a car without a title and to drive that car without a title. A bill of sale does not wield the same power as a title, so someone may question you about being the legal owner until you have the actual title in hand.

Moreover, the replacement process can be lengthy. It will not be possible to register the car at the DMV or insure the vehicle during that time, so it makes the vehicle unlawful to drive until your replacement title is in hand. You can not get license plates for the car in most states using just the paperwork for a lost title.

If purchasing a vehicle from a dealership utilizing financing, you will not have a physical title until the loan is paid in full. During the loan term, you are legally allowed to drive the vehicle despite not having the title. At the end of the loan, the lienholder will release the title, and the certificate will go to the owner.

Is It Worth the Hassle?

If all of this seems like a lot of work and it can be. While it is often possible to replace a car title yourself, the paperwork involved and the time you will spend at the DMV make the prospect unattractive to most folks. You may want to ask yourself if the time spent on a lost or missing title is worth your efforts. Weigh your frustration and the time required to correct the title issue against the vast inventory of used cars on the market to determine if you want to invest any elbow grease in getting a title for the vehicle.

You might likely buy the same car or a similar car elsewhere with no title issues. By contrast, if the vehicle is tough to find, you may consider it time well-spent and not mind putting in extra effort to become the vehicle's next owner. Ultimately, the choice to purchase a car without a vehicle title or not depends on just how much you want the vehicle in question and how much you're willing to do to own it.

While buying a car without a title complicates the process, it isn't the end of the world. Look at these steps, get as much information as possible from the seller, mechanics, repair shops, and vehicle history reports before making a deal. And get everything squared away with the DMV or the state's vehicle agency to make sure all documents point to you as the owner and any unpleasant surprises are disclosed and accounted for.

Then remember to keep that copy of the title in a safe place.