Did you just find the perfect car for sale, but it’s missing a title? Be careful, buying a car without one carries significant risk. However, there is a chance it’s safe, you just have to make sure to protect yourself. Wondering how to buy a car with no title?
Do diligent research. First, check its history report using services like CarFax or AutoCheck. Next, contact the NICB to ensure it’s not stolen. Lastly, take it to a mechanic for inspection. If you decide to move forward with the purchase, be sure to fill out a detailed Bill of Sale.
While the seller may have simply lost the title, there’s an equal chance something fishy is going on. A few examples include that it’s stolen, has a salvaged title, or that the seller doesn’t have the legal right to sell it.
Each of these scenarios will eventually lead to a massive headache. Don’t be the one to look back and wish you hadn’t. Instead, take the proper steps to protect yourself from liability.
Thankfully, in this article, we’ll cover everything you need to know. Including what a car title is, and why not having one is so risky. We’ll then review the proper steps you can take to ensure it’s a safe vehicle to purchase.
Lastly, we’ll look at a few ways to further document the sale so that you’re safe from liability if an issue ever comes up.
What Is A Car Title?
Simply put, a car title is what shows who its legal owner is. If you have one and your name isn’t on it, then it’s not legally yours.
In this case, you’ll need to track down the previous owners and ask them to request a new one through the DMV.
What’s included on a car title?
- Names of the registered owner (s)
- Address of the registered owner (s)
- Year, make, and model of the vehicle
- Body style (coupe, truck, SUV, sedan, etc.)
- Title number
- VIN (Vehicle Identification Number)
- Vehicle weight class
- Odometer reading at last title transfer
- Lienholder data (if applicable)
Now that you have a better idea of what a title is. Let’s look at why it’s so important to have one, especially if you are thinking of buying a car without one.
Why Does It Matter If A Vehicle Doesn’t Have A Title?
Buying a car without a title is extremely risky. The first reason is that it might be branded as salvaged or totaled. This means that at some point, the vehicle has had extensive mechanical or autobody work, which may or may not indicate there’s frame damage.
When this amount exceeds around 80% of the value of the vehicle, then insurance will write it off as a loss.
Why is a salved title a bad thing? Well, according to KBB (Kelly Blue Book), a leading authority on vehicle values, a branded title can reduce the worth of a vehicle by as much as 40%. Though, it’s important to note that this can be much worse depending on the severity of the damage.
This means if you find a car for sale for $10,000, and you price it using either NADA or KBB. If it has a salvaged title, then it’s actually only worth about $6,000. The other thing to remember is that banks don’t typically lend on salvaged vehicles, meaning you’ll have to pay cash.
The other reason it’s not suggested to buy a vehicle without a title is that there’s no way to be sure that the person selling it is the legal owner. This means that you could go through all the steps to finalize the sale, hand the money over, and years later find out that that wasn’t the person that owned it.
Meaning that you’d not only lose the money you originally spent. But you’d now be involved in a huge legal mess should the real owner seek to claim their property.
For these reasons, if you find a car for sale that does not have a title, be sure to research it before spending any of your hard-earned dollars. We’ll discuss how to do so in the next section.
Research The Vehicle Extensively
Step #1 – Check The History Of The Vehicle
CarFax charges $39.99 for a single report, and AutoCheck charges $24,99. Though, if you plan to run a report on several vehicles, you might want to check out their package deals to save a few bucks.
Both will provide the following data about the car you’re looking at:
- Any reported accidents (above a specific dollar amount)
- If there’s any frame/structural
- Previous/open recalls
- The number of previous owners and the locations registered
- Warranty data
- Maintenance history
- Odometer readings
Step #2 – Contact The DMV To Identify Previous Owners
While they won’t be able to provide confidential information, such as the names and addresses of previous owners, they can confirm. Simply give them the VIN, and they can pull it up.
They can also confirm the status of the title. Such as whether it’s been totaled or salvaged. As well as any significant accidents it might have been in.
Step #3 – Make Sure It’s Not Stolen
The last thing you want is to find out years later that you bought a stolen vehicle. Here’s where the NCIB comes in (National Insurance Crime Bureau). Not only is running a VIN free, but it’s simple as well.
Just head to their site here and enter the VIN in the search bar. However, it will only display a car if it’s been reported as stolen.
Step #4 – Have The Vehicle Inspected By A Professional
This is good advice when buying any car, not just one without a title. Take it to a shop to have them inspect the shape it’s in. Not only can they inform you if there are issues like high oil-pressure, a cracked engine block, or if it needs a new alternator. But they can also tell if it has flood damage, in which case you should avoid finalizing the sale.
If you’ve gone through each of these steps and no red flags have come up, then you’ve likely found yourself a winner. However, you’ll want to properly document the sale just in case, which we’ll review in the next section.
Options For Completing The Sale
Option #1 – Complete A Detailed Bill Of Sale
A Bill of Sale further documents that a sale took place between one party and another. It should include the following:
- The names and addresses of both the seller and buyer
- A description of the vehicle (year, make, model, selling price)
- Current odometer reading
- A signature from both parties (in some states getting it notarized is required)
- Anything additional that’s been promised from either party
For an extra layer of protection, be sure to also include a photocopy of the state ID/license of the seller.
Option #2 – Acquire A Surety Bond
While it’s not an option in all states, a surety bond is a great way to document a sale. This is a three-party agreement that records that a transaction took place.
Should anything happen that violated the terms of the bond, the affected party can make a claim to obtain what’s owed. In exchange for their service, you pay a percentage of the amount of the sale.
Note that the title will show as “bonded” but can be removed after three to five years, in which case you can apply for a clear title at the DMV.
Option #3 – Ask The Seller To Request A Duplicate Title
If the seller does not have a title, you can always ask them to apply for a new one. This means having them fill out a “Request for Duplicate Title.” Once they’ve received the new one in the mail, you both can head to the DMV and complete a “Transfer of Title” form.
While this will take a bit of time, it’s the safest way to buy a car with no title.
Your Best Bet When Looking At A Car With No Title – Protect Yourself
The last thing you want is to find yourself in a bind because you chose to cut corners. Thankfully, by following the simple guidelines in this article, you should have everything you need to protect yourself from liability when buying a car with no title.