When you buy a new car in the United States, you are required to sign a number of different agreements. One of these is the title of your new car. Your brand-new automobile title will be issued by the state where you purchased the vehicle. If you live in another state, you need to make sure that when you register your automobile in the state where you normally live, you take it to the local Department of Motor Vehicles. Make sure you are familiar with the procedure for acquiring a title in the state where the car is located if you plan to make the purchase there. This article will go over how to get a car title, the difference between a car title and registration, how to get a loan with a car title, and when to update one’s car title.
What Is a Car Title?
A car title is a legal document that the state government issues to prove who is the rightful owner of the car. An official title contains details about the car and its owner. Unlike proof of insurance and vehicle registration, a car title only shows who owns the vehicle. Pay-per-click car loans, cash purchases, and ownership transfers all result in the receipt of a vehicle title. In addition, your vehicle’s title needs to be kept in a safe location.
With some state-by-state variation, car titles typically contain the following information:
- Owner’s name
- Vehicle identification number (VIN)
- When the car was sold, the odometer read
- Class of weight
- Information about the lienholders if the sale is financed
- Section of the title assignment showing the buyer’s and seller’s names, addresses, the sale’s date, and signatures
Types of Car Titles
You may hear the term “clean title” or “clear title” when researching potential used cars. That means this car has never been in an accident, had expensive repairs, or been recalled. This suggests that the car wasn’t a total loss and can be traced back to its original owners. There are four types of car titles, as listed by Direct Auto. However, the phrasing may be different depending on where you are.
- Clean: No major issues and the vehicle’s framework is sound
- Clear: The car has no outstanding loans
- Salvage: Refers to the legal status of a damaged vehicle that may have problems being insured.
- Rebuilt or Reconstructed: A salvage vehicle receives the designation of “rebuilt” if it has been repaired to the point where it may be driven safely again.
According to Road and Track, there are other car title types, such as lemon law buyback. Your state’s lease option may allow you to get your car retitled as a “lemon law buyback” even if it wasn’t originally labeled as such when you acquired it.
Loan with Car Title
There is always the chance of losing money on a loan if payments are delayed. However, if you default on a car title loan, the lender can take your vehicle as collateral, which is a very serious result. You should know the risks of acquiring a title loan before you decide to do it.
What Exactly Is a “Car Title Loan”?
A car title loan, sometimes known as a “pink slip loan,” involves handing the lender the title to your car as security in exchange for a loan that ranges from 25% to 50% of the value of your car. With 15 to 30-day repayment terms, these small loans often have a $100 starting price.
Car title loans are also a good option for people who have bad credit but need cash right away. When it comes to your credit history, the majority of lenders won’t care at all, and some won’t even run a check at all. The majority of applications are straightforward, and if successful, funding can be provided in as little as one business day.
Due to the convenience of these loans, they carry extremely high rates of interest. Interest rates charged by lenders are regulated in some states but not in others. Also, lending institutions are not allowed to make a car title loan in all states.
For the most part, you’ll need to be the only owner of your car in order to qualify for a loan if you live in a state that allows car title loans. A small number of lenders will consider giving you one of these loans if your car is almost paid off.
How Does a Car Title Loan Work?
There are a few distinct types of car title loans available. Some loans have to be paid back in full, plus interest, in one lump sum within a month or so. Payback terms for installment loans typically range from three to six months.
Even though the word “car” is in the name, this type of loan is available for everything from motorbikes to boats to campers.
Whether you choose to apply online or in person, you’ll still have to physically bring your vehicle in for an inspection. Car title loans require a clean title, evidence of insurance, and a valid photo ID. Lender requirements can include possession of a key or keys. Unless you default on the loan, you can keep the car while making payments.
Example: You have a car that is worth $5,000, and you need $1,000 for an unexpected need. Getting that $1,000 immediately is possible with a title loan because you are borrowing against the value of your car.
Furthermore, a car title loan is secured by the value of your car, much like a mortgage is secured by your home. You will have to pay off the debt in full, including the lender’s hefty costs, before you can obtain your title back. Also, read BUYING A CAR WITHOUT A TITLE: What You Should Know.
What Are the Pros and Cons of a Car Title Loan?
Using your title as collateral for a loan is a simple way to get cash fast. You don’t have to go through the standard loan process to acquire one of these loans based on the value of your car. While payday loans may seem like a smart option in the short term, they can quickly spiral out of control, resulting in repossession if you end up defaulting on your payments. When feasible, you should try to avoid getting a car title loan.
Here Is the Advantage:
The most obvious benefit of a car title loan is that it gives you quick access to cash when you need it most. If you need money but don’t have a strong credit score, a car title loan may be an option.
If you can’t pay the balloon payment at the end of the loan’s term, it’s also not guaranteed that your car will be taken away. You can refinance your current loan into a new short-term loan with several lenders. Still, be careful, because this will make your next loan much more expensive because of interest and fees.
Disadvantage:
There is a need for the consumer protections that some states provide with regard to title loans. You might easily make your financial situation worse if you’re not attentive.
If your loan goes into default, you may lose your car title. Also, if you can’t make your payments on this loan, the lender can take the car as collateral. If you don’t have a car and have trouble getting to and from work, it could hurt your finances.
These loans are expensive since the interest rate is substantially greater than what you’d pay on a standard loan. Monthly fees of 25%, for instance, work out to an annualized interest rate of 300%. You might not give this much thought because you plan to repay the loan in a relatively short amount of time. If you don’t pay off the first auto title loan, rolling it over into a new one can be costly.
What Are Car Title Loan Alternatives?
A car title loan is not a good idea because it is easy to get deeper into debt. The next few ideas may help you avoid taking out a car title loan when you need quick cash.
#1. Auto Equity Loan
If you haven’t paid off your car yet, this can be another option to explore. Get a car title loan only if you own the vehicle free and clear, with no outstanding loans or payments on the vehicle. The equity in your vehicle (the difference between its current value and the amount you still owe on the loan) can be used as collateral for a high-interest, short-term loan with an auto-equity loan.
#2. Consider Taking Out a Loan for Yourself
If you’re looking for an unsecured personal loan, your best bet may be a credit union or a small local bank. Federal credit unions may provide PALs (payday alternative loans) between $100 and $1,000 for terms of 1 to 6 months at an annual percentage rate (APR) of up to 28%. Borrowers need to have been credit union members for at least a month, and members are limited in the number of PALs they can take out in a given time period. Personal loans offer higher interest rates than secured loans, but their APRs and payment arrangements are simpler.
Personal, unsecured loans are also available online. The majority of banks and credit unions now allow customers to apply for loans online, and some lenders will even tell you the minimum credit score required to get approved. A personal loan with a cosigner from your family could help you get a better interest rate or more favorable repayment terms if you have poor credit.
#3. Get a New Car Loan and Refinance
If you have little or no other debt, a typical bank auto loan could be a good way to refinance your car. You could consider a smaller bank or credit union if you have a poor credit score because their loan qualification process may be less stringent. The annual percentage rate (APR) on the new loan will be much lower than the APR on a title loan, and the payments on a standard three- to five-year car loan will be easier to plan for financially.
How to Get a Car Title
Though mastering the steps involved in purchasing a car is certainly something to be proud of, you can’t officially call the vehicle “yours” until you figure out how to obtain a title. A car title serves as proof of ownership. Until you settle your auto loan, your lender will put a lien on your vehicle and keep the title in their possession. When you’ve paid off your loan in full, the lender will remove the lien.
Most states provide the new legal owners anywhere from fifteen to thirty days to change the title registration to their name. However, from state to state, processing times can range from a few days to a couple of weeks. Here is how to get a car title:
#1. New Title
Changing the name of a car’s title is a simple process in most cases. Usually, the dealer will take care of the necessary documentation and submit it to the Department of Motor Vehicles or an equivalent local agency. In the following days, you should receive it either physically or electronically. Be patient if you financed your car, but don’t expect it any time soon. Paying down the loan is a prerequisite to getting the title.
If you buy a car from a private party rather than a dealership, you’ll need to go through a somewhat different process to receive a new title. A valid transfer of ownership is not complete until they hand over the title. As important as this is, it is ultimately your obligation to see that it is completed. The next step is to send the paperwork to the DMV or another relevant agency so that you can officially register the title in your name.
Depending on where you live, you may need to provide additional information when registering your car title as the new owner, but in most cases, you’ll need to provide the following:
- A copy of the title bearing the seller’s signature
- Validation of the purchase
- Measurement via odometer
- If you have a lien on the vehicle because of a loan, the following information is required.
- A waiver certifying that the seller has no outstanding liens.
#2. Lost or Duplicate Title
Need to know where to obtain a duplicate car title? Lost titles can be replaced at any Department of Motor Vehicles. Most of the time, you can ask for a duplicate title online and send in the necessary paperwork. However, your presence may be required in person in some other states. To obtain a new certificate of eligibility, please have the following data ready:
- Manufacturer, model, year
- Vehicle identification number
- Legal documentation for a loan (if applicable)
Read Also: CAR REPOSSESSION: How It Works & How To Avoid It
Car Title vs. Registration
A vehicle’s title (or “pink slip”) is proof that you are the rightful owner of the vehicle. Simply put, it proves the identity of the car’s legitimate owner.
The process of registration is different because it is required by the state and shows that you have officially registered the car and paid any taxes or fees that go along with it. Vehicle titling is a prerequisite to car registration. When you register your vehicle with the state, you’ll receive a license plate and registration paperwork or a sticker to display on your vehicle’s license plate or windshield.
Having a license or title plate on your car shows that you’ve paid your registration costs and makes it easy to track down the vehicle’s rightful owner.
How Do I Get a Title for My Car?
It is impossible to sell your car to a new owner or transfer ownership to them without the title. When you’ve paid off your auto loan in full, you’ll get the title to the car. Lenders hold the title until debt repayment. Here’s how to get a title for your car:
- Visit your county’s Department of Motor Vehicles.
- Put in an application for a second title.
- Submit identifying documentation and have it notarized if required.
- Put down your money.
Where Exactly Should You Maintain the Title of Your Car?
Do not leave the title to your car in the car, where it runs the risk of being misplaced, destroyed, or stolen. You should keep your car title in a safe place, just like you would with other important physical documents such as your passport, birth certificate, and Social Security card. Unlike your registration and proof of insurance, which must be easy to find whenever you drive, these two documents do not need to be easy to find.
Conclusion
In conclusion, a car title is a crucial piece of paperwork for any car owner or buyer, or seller. It’s not just a piece of paper that proves you own a car—it also carries info that could be crucial when it comes time to buy a new one. When you finally get your hands on the title of your car, make sure to put it somewhere safe where you won’t lose it but can still easily retrieve it in the future.
Car Title FAQs
Can I sell my car without the title in hand?
The car’s title is proof of ownership because it associates the owner’s name with the car. A document of such significance cannot be overlooked. You can’t sell or give away your car to someone else unless you have the title in your possession.
Who keeps the title to a car?
Lenders typically hold onto titles until the loan is paid in full. The original title document is returned to the buyer upon full payment.
When should you update your car title?
You must update your vehicle’s title whenever you sell it, transfer ownership to another person, or relocate to another state. Though the specific steps and timeframes for making modifications can vary by state, most allow for at least 30 days.
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