Perhaps you’ve searched for an ideal car and finally found it. The car is in good condition, and the price is right. Everything’s perfect, but there’s only one catch: The car doesn’t have a title. That seems a significant barrier to buying cars with no title.
But does that mean you can’t purchase the car?
Well, there’s still hope for you. To drive on public roads, you ought to have proper registration and insurance. If you want to buy a car with no title, you should realize there are numerous risks and pitfalls involved. We suggest you first do some extra paperwork and meticulously research the vehicle’s registration.
The world of buying cars with no title can be tough to navigate without any guidance. There are tons of helpful tips and secrets you can only learn through experience… Or by learning from someone who’s purchased cars with no title.
That’s where we can help. This article will give you a comprehensive look into every helpful tip and secret we’ve uncovered over the years of buying cars with no title.
- Purpose Of A Car Title
- Buying Cars With No Title
- Completing Sale Options
- Title Jumping
- Types Of Car Titles
The Purpose Of A Car Title
Simply put, a car title establishes ownership. It’s one of the most important documents because it’s the legal form that makes you the official owner of your vehicle. Here in the US, you can hardly register a car unless the title is in your name. If you have one and don’t have your name on it, then it’s not legally yours.
What’s Included In A Car Title?
- Model, make, and year of the vehicle
- Names of the registered owner
- Address of the owner
- Body style (sedan, SUV, truck, coupe, etc.)
- VIN (Vehicle Identification Number)
- Title number
- Odometer reading at last title transfer
- Technical information, such as vehicle weight class
- Lien Holder data
Now that you have a thoughtful insight into a title, let’s look at the importance of having one, especially if you’re looking to buy a car without one.
Why Does Buying Cars With No Title A Cause For Concern?
Buying a car with no title is extremely dangerous. First, it may be branded as totaled or salvaged. This means that the vehicle had extensive body repairs or mechanical work at one point, which may indicate frame damage.
When this amount surpasses 80% of the vehicle’s value, insurance will disregard it as a loss.
Why is a salvaged title not a good thing?
According to Kelley Blue Book (KBB), a leading automotive shopping website, a branded title can reduce a vehicle’s worth by nearly 40%. However, it’s worth noting that this can be even worse, depending on the severity of the damage.
This implies that if you find a car going for $12,000, and you price it using KBB or NADA. If the vehicle has a salvaged title, then its actual worth will be about $7,200. Another thing to recall is that financial institutions such as banks don’t typically lend on salvaged cars. You’ll therefore have to pay cash.
Another reason why buying cars with no title is not recommended is because you cannot ascertain that the seller is the legal owner. You may proceed to buy a vehicle, from finalizing the sale and handing over money, only to find out years later that that wasn’t the legal owner.
Meaning you’d not only lose your money. But you’d also be in a tough spot should the actual owner decide to claim their property.
Due to such reasons, if you happen to find a car for sale with no title, make sure to do your due diligence before spending your hard-earned money. We’ll discuss how to do so in the following section.
Research The Vehicle Thoroughly
Tip #1: Check The Vehicle’s History
If the seller sells a car with no title, that’s a red flag for several reasons. The vehicle could be salvaged or stolen, and you don’t want a car that’s either of those.
AutoCheck charges $24.99 for a single report, while CarFax charges $39.99. However, if you’re looking to run a report for numerous vehicles, it would help if you checked out their package deals to save a few bucks.
Either of them will provide the following information regarding the car you are looking at:
- Open/previous recalls
- Reported accidents (if there are any)
- Insurance claims associated with the VIN
- Locations registered and the number of previous owners
- Odometer readings
- Maintenance history
Make sure to order your own report and not the one the seller gives you. If anything looks sketchy at this point, walk away from the purchase. Another vehicle will come along.
Tip #2: Check With The DMV To Recognize The Car’s Status And Previous Owners
Suppose you choose to proceed with the purchase after checking out the vehicle’s history. In that case, you may want to contact the Department of Motor Vehicles (DMV) or vehicle registration office near you and key in a query question using the vehicle identification number (VIN).
While they may not provide confidential information, such as the names and addresses of previous owners, they can confirm. You can also verify the status of the vehicle’s title with a DMV clerk. Such as whether it’s been salvaged or totaled. As well as any previous accidents it might have been in.
The DMV may also inform you of any current liens on the vehicle. If you purchase a vehicle with no title or a lien on it, the lending institution can come after you for the outstanding loan agreement. If you notice a lien on the car you’re interested in, contact both the lien-holding institution and the seller before proceeding with your purchase.
Tip #3: Check With The National Crime Bureau (NICB)
The last thing you want is to find out some years later that you mistakenly purchased a stolen vehicle. Here’s where the NICB comes in.
The NICB offers a free VIN check service to help one ascertain the legal status of a car. The service displays if a car has been stolen and has not yet been recovered by law enforcement. It can also inform you whether an insurance company has reported the car as a junk or salvage car.
Checking the vehicle’s legal status through the NICB will help keep you off any legal issues if you’re pulled over by law enforcement.
Not only do buying cars with no title create a complicated legal situation for you. There is also no assurance that the money with which you bought the car will be recovered. This will force the authorities to take hold of the vehicle.
Tip #4: Request An Inspection
This is actually a bold step to take when buying any car, not just one with no title.
If you’ve conducted your proper research, a complete car history may not be up to date to your expectation. Therefore, it will pay off to run an independent inspection on the vehicle to ensure it’s in excellent and working condition.
Take it to a shop to have it thoroughly inspected by professionals. Not only will they inform you of any issues like a faulty alternator, cracked engine, or a high-oil pressure. But they’ll also tell you if the vehicle has flood damage, in which case you should put a halt on finalizing the sale.
If you’ve gone through each of these steps and everything seems on point, you may proceed with the sale. Next, you’ll want to appropriately document the deal just in case, which we’ve covered in the following section.
Options For Completing The Sale – Buying Cars With No Title
Tip #5: Have The Seller Request A Duplicate Title
If the seller doesn’t have a duplicate title, you can always ask them to request one from the DMV. They’ll need to provide the name and address of the titleholder, proof of ownership, the car’s mileage, and the VIN for the vehicle. Don’t let them convince you to take this task on your own: due to the extensive amount of stolen vehicles, the DMV will be highly reluctant to grant title to someone who’s not listed as the vehicle’s owner.
This process may take a few days for the duplicate title request to be processed as well as the issuance of a new title.
If the seller provides phony information, it can lead to a rejection of the new title. On that note, it’s advisable to delay the purchase until the new title is processed and is in the seller’s hands.
Tip #6: Complete A Bill Of Sale
If you’re not willing to wait for the new title to arrive, you might be prompted to complete a bill of sale. This document is an essential part of any sales process, but it’s undoubtedly critical if the seller has no title to hand over. It shows that a sale took place between one party and another.
Before paying for the car, write a bill of sale that includes the sale’s details, such as the car’s odometer reading, VIN, names and addresses of both the buyer (you) and seller, and a signature from both parties.
If you opt for a bill of sale, make sure to pay the seller with an easy-to-prove method. You can use a bank draft or check to pay for the vehicle since these are written records of purchase and can later be used to prove your purchase. Alternatively, you can agree with the seller to place the vehicle funds in an escrow till the terms of the sale are met.
Tip #7: Obtain A Surety Bond
While it’s not available in all states, a surety bond is an ideal way to document a sale. It records that a transaction took place.
A surety bond title also requires submitting proof of purchase, evidence that the vehicle isn’t salvaged, and residency. The bond company will also need to evaluate the car to determine the amount of the surety bond. Once everything’s verified, you’ll be required to pay a certain percentage of the total bond amount.
Although this amount varies from state to state, it’s usually not exceeding 1.5 times the vehicle’s value. The bond price varies depending on your credit score, amount, and other financial histories.
A bonded title indication can be removed from the title within 3 to 5 years. That is, as long as no issue arises with the title bond. Other individuals can also challenge your car ownership during this time frame, which may result in a lawsuit. During this period, the title will show as ‘bonded’, after which you can apply for a clear title at the DMV and register it in your name.
Ensure you keep copies of all paperwork during the purchase contract within the three to five years after buying the vehicle.
Tip #8: Register The Vehicle
Upon successful application of a clear title, you can proceed to register the vehicle in your name with the DMV and your insurance just like you would do with any other car- new or used.
Some states, however, let residents register new vehicles without the title. But most states need the title. The DMV may issue a non-transferable registration. This means that the car is registered in the state and can be used for personal use by the owner. And can’t be sold to another party with this status.
Paperwork needed to register the vehicle, and title transfer can be found on the DMV website or by contacting the state office by phone.
Title jumping is another cautious practice you need to look out for when you’re buying or selling your car. Such practice is unlawful. When you fail to register your car title after you buy it and sell it afterward, it means your title is jumped since there’s no authorized record of ownership.
Types Of Car Titles
According to CarTitles.com, there are several types of car titles, even though the exact naming may vary depending on your location. In this section, we’ll delve into the most common types of car titles you’ll likely come across when searching for a vehicle.
1) Clear Title
A clean title means there is no financial lien stopping the car from being sold. Clear title vehicles were once accorded the salvage title and have afterward been revamped and passed state inspection to be branded the clear title.
In other words, the vehicle is owned clear and free by the seller and isn’t tied to third parties or creditors that may claim ownership. Clear title cars are among the only car titles entitled to a loan. They are also a desirable choice when searching for a car.
2) Clean Title
Often confused with a clear title, a clean title means the vehicle either hasn’t received any significant damage or has been in an accident that would deem it a total loss. If you are buying a used car, this is the most ideal title you’ll find.
3) Salvage Title
Vehicles with salvage title have incurred some loss event such as theft, significant damage (usually 75% of the vehicle’s value), or repair. Though cars with a salvage title can be revamped and be worthy of road use, they can’t be qualified to earn the clear title status. Because of their flawed history, vehicles with salvage titles are often sold at a discounted price and are typically not fit for financing by lenders.
The decision to brand a car the salvage status is typically done by the insurance company, which pays a claim on the vehicle. Despite the fact that they issue the salvage title to vehicles when they consider it a complete loss, that isn’t usually the case. Occasionally, insurance companies issue salvage titles to vehicles to avoid paying huge claims related to property or medical damage costs.
As such, some states have statutory regulations in place for the insurer to abide by before branding a car the salvage title. A good example is that, for a vehicle to be deemed salvage, it ought to have incurred damage over 60% of its original value. Otherwise, the insurer may choose to brand any vehicle the salvage title, even if there’s little or no damage.
Generally, it’s typically dangerous to buy a vehicle with the salvage title, as such a vehicle may be uninsurable, require extensive repairs, or cost you more to insure.
4) Reconstructed Or Rebuilt Title
A reconstructed or rebuilt title is branded to salvage vehicles that have successfully been repaired and are entirely safe and operable. Basically, this means the vehicle experienced extensive damage. But afterward, the state inspected it once repairs were done and classified it as ‘fixed’.
A collision center, insurance company, body shop, or a licensed rebuilder typically issues a reconstructed or rebuilt title. To obtain a reconstructed or rebuilt title, the vehicle must undergo an extensive inspection to verify it’s roadworthy.
However, the problem with reconstructed or rebuilt title vehicles is that even though they are repaired, they may still need additional repairs and may not be reliable.
5) Bonded Title
Cars with severe deficiency in their ownership credentials can occasionally acquire a vehicle title using a bonded title. Here, a security bond is bought, totaling the vehicle’s value. If a lawful claim comes forward in the future, the security bond is used to eliminate lien or claims of ownership.
The bonded title holds the ‘Bonded’ stamp between a period of 3 to 5 years. This is because acquiring a bonded title is more expensive than other title recovery options. It’s, therefore, chosen as the last resort when other methods are considered impossible.
6) Lemon Title
Often a car is branded the lemon title when it has numerous critical mechanical issues, making it unsafe to drive. Each state has different regulations which make a vehicle lemon, with some states having no such regulations at all.
A vehicle isn’t branded lemon immediately since the manufacturer has a chance to fix the recurring issue. If the problems can’t be solved or reappear after numerous repair attempts, the car can be rightfully be branded as a lemon.
7) Water Damage Title
Also known as a flood damage title, a water damage title is issued to a vehicle with problems in its electrical or mechanical components. Such problems are caused by water, perhaps as a result of hurricanes, flash floods, and thunderstorms. In other cases, they may result when the car was pitched in a lake.
Since issues resulting from such damage are often extensive, it’s crucial to have the vehicle inspected for water damage before closing the purchase deal.
8) Dismantled Or Junk Title
Vehicles that have extensively been damaged beyond repair are branded dismantled or junk titles. Such cars have suffered extensive damage to their major components, hence can’t become roadworthy. Dismantled or junk cars are thus sold to junkyards. And while they’re unfit for road use, they’re often used as scrap metal or for salvaging parts.
Most dismantled or junk can’t be changed or removed. There are, however, very rare scenarios in which a vehicle can experience complex and expensive inspection and reconstruction processes to upgrade its title status. But this process is hardly attempted since the inspection and reconstruction process is much more costly than the vehicle’s total worth.
Buying Cars With No Title Can Be A Hassle, But Don’t Let It Deter You
We hope you’ve now seen that there are options when confronted with the issue of buying cars with no title.
Ultimately, the choice to buy a car with a title or not depends on how much you want the vehicle. And the extent you’re willing to go to own it. While buying cars with no title complicates the process, don’t let it deter you. Follow these steps, get as much information as possible from the seller, repair shops, mechanics, and car history report before making a deal.
Make sure to check everything with your state vehicle agency or the department of motor vehicles (DMV) to ensure all documents point to you as the legal owner.
These tools have been tried and tested by our team, they are ideal for fixing your car at home.