Why Is a Car Title Important?

new car owner signs paperwork gets handed keys

When purchasing a new or used vehicle in the U.S., you’ll most likely read through and sign several documents before claiming the keys to your new set of wheels. One of the most important documents you’ll receive is your car title, the legal document that authorizes you as the owner of the vehicle.

Car Title Basics

Your car title usually will come from the state where you purchase the vehicle. If your resident state is different from the state of your vehicle purchase, make sure you take your car title to your local (home state) Department of Motor Vehicles when registering. If you’re purchasing a vehicle out of state, make sure you know the state’s title process. Generally, your car title will include the following information:

  • Vehicle history information (VIN number, make, model and year)
  • License plate number
  • The owner’s name and address
  • Lienholder’s information (if the car has a lien against it)

Types of Car Titles

While there are many different types of car titles (according to CarTitles.com), some common ones include:

  • Certificate of origin: First car title document issued by the vehicle’s manufacturer to the car dealership. This document is used to transfer the vehicle to the first owner.

  • Clear title: Owner owns the vehicle outright without any restrictions (i.e. liens, levies, etc.).

  • Salvage title: When a vehicle incurs damage, theft or repair, the title may be placed in salvage status by the insurance company that pays a claim on the vehicle.

  • Rebuilt title: When a salvaged car has been fixed enough to drive safely, the title is upgraded to rebuilt status.

If you’re in the market to purchase a new or used car and need to get approved for financing, a local car dealership enrolled in the Credit Acceptance program can help. See if you pre qualify on our website.

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