When you purchase a new or used car, one document matters most: the car title. It’s required for all financial and legal transactions related to a vehicle.

Car title basics

So, what is a car title? A car title, also known as a "pink slip," is basically your car’s birth certificate. It includes details such as its Vehicle Identification Number (VIN), make, model, year, owner name, and address.

Titles are typically issued in the state where the car is purchased. If you buy a car in a state different from your residence, you'll need to transfer the title to your home state when registering the vehicle at your local Department of Motor Vehicles (DMV).

A car title isn’t just a piece of paper — it’s an essential document you’ll need for:

Legal proof of ownership

The car title is evidence that you own a vehicle. Proving ownership without it can be a legal nightmare, especially if you plan to sell.

Vehicle registration

Before your car can legally hit the road, you must register it with the DMV. However, you’ll be unable to do so if you do not have the car title.

Insurance

Many insurance companies require proof of ownership to provide coverage. A car title is often one of the documents they’ll ask to see before insuring your vehicle.

Buying and selling

To transfer ownership, the seller must sign the back of the car title. If they haven’t, it could prevent your ability to register the vehicle when you get to the DMV.

Types of car titles

Not all car titles are the same. Each can tell you something important about the vehicle you’re about to purchase.

Clean title

A clean title indicates that the car has no significant damage or history of being declared a total loss by an insurance company. It’s free of liens and disputes, making it the most desirable type for buyers.

Lien title

A lien title will show the lender as the lienholder if the car was financed. The lender has a legal claim to the vehicle until the loan is paid off.

Salvage title

A salvage title is issued when an insurance company declares a vehicle severely damaged or a total loss. Cars with salvage titles cannot be legally driven until they are repaired and inspected.

Rebuilt title

When a salvaged vehicle is repaired and passes inspection, it receives a rebuilt title. While these cars can be driven legally, their history often lowers their value and makes insurance or financing more difficult.

Buyer Beware

Regardless of title type, you should verify the VIN on the title matches the one on the car, confirm that the recorded mileage corresponds to what’s on the odometer, and ensure there are no outstanding liens, damage, or other undisclosed issues.

The latter is important in light of a practice called title washing, where dishonest sellers re-register vehicles in different states to hide branded titles. In addition to the aforementioned salvaged and rebuilt titles, other branded titles disclose odometer discrepancies, flood damage, and Lemon Law buybacks.

Always request a vehicle history report from the seller or use a VIN check website to find one. You may also want to seek a vehicle inspection from a reputable mechanic.

Another way to avoid surprises is to get your auto financing sorted out before you shop, especially if you have bad or no credit. Begin the online pre-qualification process through Credit Acceptance today.