You probably have seen a car title if you have owned a car before. Every vehicle on the road has a title. Vehicle titles are documents issued by states to indicate the current owner of the car.
The designations differ from state to state. However, there are some generally accepted titles across the country. The different types of vehicle titles represent the current condition of the car.
What Is A Car Title?
A car title is the “evidence of ownership.” The information found on the document includes the make, model, year, and car history. The history is to ensure that anyone who later buys the car is made aware of its history.
Typically, cars are bought from dealers. The dealer fills out the title application for the car owner and sends it to state officials. If the vehicle is purchased with an auto loan, the information of the lender will be included in the title as lien holder.
A new title is issued in response to various events which results in the vehicle being damaged or stolen. The car title is also an essential document for determining the valuation of the car.
Classification of Car Title
There are different types of car titles. The condition of the vehicle will determine the title designation issued on it.
Clean / Clear Title
Most cars on the road have a clean title. It’s the title issued when on a car. It shows that the car hasn’t suffered any major damage that can massively affect its value since it was manufactured.
A clear title is however issued to a clean title car that has no financial lien preventing its sale. The difference between the clean and the clear titles is that the auto loan of the latter has been fully repaid by the owner.
However, a clear title doesn’t always indicate complete ownership. The vehicle owner can still obtain an auto title loan or refinance with the car while keeping the title.
Salvage Car Title
This car title is issued when a car is involved in a significant accident that leads to losing above 75 percent of its value. A salvage vehicle can be repaired and made roadworthy, but will never be issued a clear or clean title. It’s also unlikely that a lender will refinance a car with a salvage title.
In some states, salvage title means that additional repairs must be completed for the car to be driven again. So, various titles are issued based on the level of damage, including the following:
Junk/ Parts Only Title
This title is issued when the car is damaged beyond repairs and is ineligible for road use. It entitles the owner to hold on to the vehicle while the parts are being sold or scrapped. Some states consider salvage and junk titles as the same.
Repairable/ Reconstructed or Restored
This type of car title is issued when the damage to a car is repairable. This will be the title of the vehicle until it’s fully repaired and inspected by a state agent. Then a restored or reconstructed title will be issued.
If the owner of the car moves to a different state, the authorities may request that the vehicle be inspected again by an authorized agent to add it to their record.
Recovered Stolen Vehicles
Some states classify stolen cars in the salvage class. This may, however, be dependent on how long the vehicle was missing and the current state at which the car was recovered.
For instance, if the original engine was removed and replaced with an older or faulty one, then it will be declared salvage. The vehicle will have to be checked for any suspicions. This law is present in 11 states, including Arizona, New York, Florida, Georgia, and Minnesota.
Buying A Salvage Car
You should be cautious when buying a salvage car. They mostly require extensive repairs and may cost you more to insure. It also comes with a massive road risk. Only buy such cars from reputable dealers or mechanics.
Memorandum Title/ Out-of-State Title
Some state may require that non-residents of that state have a specific car title to use whenever they are in the state. The title recognizes the driver or the stated owner as the vehicle owner. A memorandum title also comes handy if you live in a different state, but regularly commute in another state. A student can also get this car title for their car when schooling in another state.
Bond Title
This is a type of car title issued on a car which the individual who possesses it has no proof of ownership or a title of the transfer. The title is issued for three years after which a clear title may be issued if no valid claim is made and the vehicle retains its value. The process of obtaining a bond title is, however, very lengthy and expensive.
Branded Car Titles
This involves branding a vehicle based on a specific situation or the condition of the car. Typically branded vehicles carry negative connotations. Vehicles that have experienced a fire, flood, collision, etc. are usually branded. For instance, the cars that were affected by Hurricane Katrina in 2005 were stamped “flood damaged” by the Authority in Texas.
Title Washing
An attempt to remove, conceal, or alter the title designation of a vehicle will be a violation of the law. The situation is known as title washing or laundering. The title washing designation is common in all state and is considered a crime with severe penalties.
Certificate of Destruction
When an insurance company pays claims on a damaged vehicle, which they insured, they have the option to obtain a title of destruction. This designation implies that the car will be destroyed and never be used again.
This is mostly done if the vehicle is damaged beyond repair or the insurance company feels it’s not road worthy. A destruction certificate is obtained when essential items like airbags, frames, and others are damaged in the car.
It’s important to note once more that title designation differs across states. You can check your local DMV or state secretary for any information regarding your car title.
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