It's important to do a clean title check when buying a used car. Otherwise, you might end up with legal problems. If your vehicle title isn’t free and clear (clean), you might end up owing money you didn’t realize you owed–or worse.
The Importance Of a Clean Title
When you own a titled property outright, people say it has a free and clear title. That is, no one else can claim rights to the property beside you and any other owners listed on the title.
On the other hand, a title that’s not free and clear has a lien.
- The property is collateral for the repayment of a loan or mortgage.
- The owner owes back taxes on the property.
- A service provider holds a lien to guarantee payment for repairs or improvements.
- A lien to collect unpaid child support (usually on real estate).
There are other liens on property titles, but we’re going to discuss the kinds that apply to a car title.
Types of Liens of Vehicles
- Car financing loan. When you take out a loan to buy a car, a financial institution such as Chrysler Capital or Bank of America takes out a lien on the title.
- Car title loan. Some lending firms place a lien on a car title for a personal loan.
- Mechanic’s lien. Some states allow mechanics to guarantee payment for repairs with a lien.
A lot of people refer to a free and clear title as a “clean” title.
But a clean title is one that isn’t branded.
In other words, the car wasn’t totaled, flooded, salvaged, junked, or other things that lower the car’s value.
Here are some types of branded titles.
An insurance company might declare a car a total loss in an accident claim. It doesn’t mean that the car is beyond repair. But sometimes it costs more to repair the car than the car is worth.
The car title gets branded “salvage.” You can’t drive a car with a salvage title on a public road and you can’t get insurance for it.
If the car gets proper repairs and can pass a safety inspection, it can get a title branded “rebuilt from salvage,” also known as a rebuilt title. In some cases, salvage vehicles can be repaired and returned to the road. But because of the extensive damage, salvage vehicles are often sold for parts or scrap.
If a car sits in deep water that covers the engine compartment it gets a flood title.
A fire in the engine compartment can render a car irreparable. It gets a branded title.
You can’t have a car with a flood or irreparable title repaired. You can only sell it for parts.
Lemon or Buyback Title
In many states, it is illegal to sell salvage vehicles without disclosing that fact to the buyer. Salvage vehicles are those that have been declared a total loss by an insurance company, usually because they have been in a major accident or have sustained significant flood or fire damage.
While salvage vehicles can often be repaired, they typically carry a significantly reduced value and may have hidden defects that can make them dangerous to drive.
Many states have “lemon laws” to protect buyers from used cars with known defects. In some states, the lemon laws apply to private sales as well as dealer sales.
The seller has to have known about the defect when selling the car for the lemon laws to apply.
If a defect can’t be corrected after several repair attempts, the car is declared a lemon, and the title is branded as such.
State laws determine how many repairs attempts it takes to declare it a lemon.
According to vehicle registration laws in most states, a vehicle that has been declared a total loss by an insurance company must be given a salvage title.
Sometimes an insurance company declares a total loss, but the car can still be repaired. When a totaled car gets repaired and passes a safety inspection, it can get a “Rebuilt from Salvage” title.
Although the car is roadworthy, a rebuilt title decreases its value.
Beware Of Fake Free and Clear Titles
Fraudsters create fake lien releases and even fake titles. Some will try to pass off a free and clear title for a different car.
The car’s unique code is the key to discovering this kind of title fraud.
Every automobile has a “fingerprint” known as the Vehicle Identification Number or VIN. It has 17 characters, made up of both numbers and letters.
The vehicle identification number (VIN) appears on a metal plate on the driver’s side dashboard. You can read it from outside the car looking through the windshield.
The VIN appears in other places as well. For example, most cars have a decal with the VIN on the driver’s side door jamb.
Car Title Check by VIN
It is important to know what you are buying when you purchase a vehicle. One way to do your due diligence is to run a title check by VIN (vehicle identification number).
The VIN number is run through the National Motor Vehicle Title Information System (NMVTIS), a national consumer protection database that provides title information from states across the country. A report from the NMVTIS database gives you the vehicle’s title history, which includes whether the vehicle was ever in the possession of a junk or salvage yard or declared a “total loss” by an insurance company.
Checking vehicle records can be vital in making an informed decision about a vehicle purchase. Whether you are buying from a local dealer, or an individual or eyeing a vehicle from an online auction website, it will help you to know what you are buying before you pay any money or sign any paperwork for the vehicle.
Using The VIN To Spot Fraud
The Vin can help you spot title fraud.
- Letters or numbers on the Vin plate appear altered or scratched to make them unreadable.
- The VIN on the title doesn’t match the VIN on the car.
- The description on the title or other documents doesn’t match the car.
- The VIN is missing from the lien release papers or it doesn’t match.
If you know how to decode a VIN, you might spot a fraud.
The VIN encodes a lot of the car’s info:
- The country where it was built.
- Vehicle brand, engine size, and type.
- Year model.
- Manufacturing plant.
The 9th character in the VIN is the check code. It’s there to detect a fake VIN. Verifying with the check code is very complex. After all, it’s meant to be read by computers rather than humans.
Free Title Check By VIN
Decoding a VIN number doesn’t have to be difficult or complicated, as there are many different charts and resources that can be used. You can use simple online VIN decoders that can quickly and easily decode any VIN number.
These decoders often provide more information than traditional charts, and they are free to use.
You can use an online VIN decoder to look up the car and make sure the specs match.
DMV Clean Title Check
When you purchase a new vehicle, the dealership will usually take care of the title transfer for you. However, if you buy a car from a private seller, you'll need to initiate the title transfer yourself. The process is relatively simple, but it's important to make sure that it's done correctly in order to avoid any legal issues down the road.
The first step is to get a DMV title check. This vehicle title information will tell you whether the car has any outstanding liens or loan balances. It's important to make sure that the title is clear before you complete the purchase, as you could be held responsible for any unpaid debts.
To get a DMV title check, simply visit your local DMV office and request a copy of the vehicle's history report. If your state doesn’t have an online tool, you can visit the DMV in person. If your DMV lets you make an appointment, make one.
Once you have the vehicle title information report in hand, carefully review it to make sure that everything looks in order. Once the paperwork is complete, you'll need to submit it to an approved provider for title transfer.
If everything checks out, you can proceed with confidence knowing that you're getting a good deal on a car with a clean title.
Most states’ Department of Motor Vehicles (DMV) has a title check tool you can use on their website. You can enter the Vehicle Identification Number (VIN) and it’ll pull up the title records. It shows any present and past liens and whether they were released.
A Vehicle History Report Can Verify a Free and Clear Title
A Vehicle History Report (VHR) is a document that provides detailed information about a particular vehicle's history. This report can be used to verify that the vehicle in question has a clean, or "free and clear," title.
A free and clear title means that the vehicle does not have any outstanding liens or judgments against it, and that it is not currently involved in any legal disputes.
VHRs are often used by potential buyers as a way to confirm that they are not purchasing a "lemon."
Furthermore, VHRs can also be used to check for theft, salvage, and other red flags that may indicate that the vehicle is not worth its asking price. In order to obtain a VHR, potential car buyers simply need to make a records request to the appropriate agency.
A vehicle history report such as AutoCheck can reveal the title status. It’s a good way to find out if a car has a free and clear title.
AutoCheck gathers info from several sources to show title issues:
- Salvage and junk titles.
- Odometer rollback.
Get Lien Release Paperwork
When a title has a lien from a car loan, the lender may hold the title until the loan is paid off. Once paid off, the lender sends the title to the car owner.
In some states, an officer of the bank or financial institution checks the “lien satisfied” box and rubber stamps “paid in full" or something similar. He or she then signs the title.
The signature and rubber stamp are too easy to fake. If the title shows that the car ever had a lien, insist that the seller provide lien release documents as well. These documents should include the ID cards’ numbers of both the lender and the borrower, as well as the date of payoff.
How To Get a Lien Release
Oops! If you found this blog post because you already bought a used car and found out the title has a lien...
Hopefully, you didn’t buy from a con artist who’s skipped town already. Otherwise, chances are it’s pretty easy to resolve.
It could be that the lien was paid off, but the DMV records information system didn’t get properly updated. When that happens, there are a few steps you can take to resolve it.
Contact the Seller
When you buy a car, the seller must give you certain documents that transfer ownership of the vehicle. These include the certificates of title, as well as any release documents relating to outstanding liens on the car.
If the seller fails to provide these documents, it may be because they intend to use your payment to satisfy the lien. In this case, you should ask the seller to take care of the lien and send you the release documents.
Maybe the seller simply forgot to give you the documents. Make contact and ask for them.
Contact the Lienholder
What if you can’t contact the seller? If the lien is paid off, you should contact the lienholder and ask them to send you a document stating they’ve released the lien.
- A letter confirming the loan is paid off.
- Lien release form for the state.
If another institution bought out your lienholder without government assistance, you’ll need to contact the new owner.
If a new owner bought the lienholder with government assistance, you should contact the FDIC.
You can also contact the FDIC if the lienholder is a failed bank that didn’t get bought out.
Getting a Clear Title Is Worth It
To have a free and clear title, you have to make sure that it doesn’t have a lien. That is, if someone else can claim rights to the car, you will need to get a lien release.
When buying a used car, beware of title fraud. Some scammers will try to sell a used car with a fake title.
The Vehicle Identification Number (VIN) can reveal title fraud. You can easily find out if a car’s title is real and whether the car has a lien with a vehicle history report. AutoCheck offers the best value in researching a car’s history.
Even when a lien is paid off, the state records might not reflect it. You can resolve this by taking lien release documents to the DMV.
Buying or selling a used car is easier than ever when you use PrivateAuto.
You get free dealer-quality services when you buy or sell with us:
- Keep your personal information safe. Communicate with your contact through the app so that you don’t have to reveal your private info.
- Advertise your vehicle for free until it’s sold.
- Schedule test drives straight from the platform.
- State-specific documents are included with your car listing.
- Electronic document signing.
Plus, you get valuable tips for buying and selling in your state.
It’s easy to get started. Set up your free PrivateAuto account now.
Steps for Selling Your Vehicle through PrivateAuto
Steps for Selling Your Vehicle through PrivateAuto
PrivateAuto makes selling your used vehicle easy. The sales process consists of a few simple steps:
- Gather necessary documentation
You’ll need your vehicle title and other documentation discussed above. Have it handy, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition. Get started here.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a test drive
The buyer will want to test drive your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to coordinate a time and place for a test drive. (Oh, and you’ll be able to finalize the transaction instantly at the test drive location, FYI.)
6. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the Bill of Sale within our app, from your phone. With our shared documents feature, you can easily locate the vehicle paperwork needed after the sale.
7. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
8. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the title transfer document.
9. Cancel car insurance
You don’t want to pay for insurance on a car you no longer own, so be sure to remove the sold vehicle from your insurance plan.
Interested in buying a used car? Browse used vehicles for sale!
Vehicle Title FAQ
What's the difference between a clean and a clear title?
A title is clean if there are no unresolved legal issues attached to it. This means that the current owner is the rightful owner and there are no other claims or liens on the property.
A title is clear if there are no outstanding judgements or tax liens associated with it. In order for a title to be considered clear, all claims against the property must be satisfied.
A title may be clean but not clear if there are unpaid taxes or other debts associated with it.
A clear title is necessary in order to sell a property. A clean title is generally not required, but it may make it easier to sell a property. If a potential buyer knows that the title is clean, they will not have to worry about outstanding legal issues or debts attached to the property.
How do you check if a car was in an accident?
There are a few things you can do to check if a car was in an accident. First, you can get a report from the Department of Motor Vehicles (DMV). These vehicle records will list any accidents that have been reported to the DMV.
You can also get a Vehicle History Report, which will list accidents that have been reported to the National Highway Traffic Safety Administration (NHTSA). In addition to checking the NHTSA database, you should also do a VIN check to make sure that the car you are considering has not been reported as stolen.
Another option is to have the car inspected by a qualified mechanic, who can look for telltale signs of damage, such as mismatched paint or misaligned panels.
Finally, you can take a closer look before you buy the car. Look for any dents, scratches, or other signs of damage. If you see anything that looks suspicious, it's possible that the car was in an accident.
How do I replace a lost title?
If you’ve misplaced a vehicle title, or if it’s been stolen or damaged, you can replace the title by requesting a duplicate title. You can usually do this in a few simple steps:
- Identify your state’s motor vehicle authority
It’s usually called the Department of Motor Vehicles or DMV. Some states may call it by a different name, such as the Registry of Motor Vehicles or the Bureau of Motor Vehicles. In some states, motor vehicle authority falls under another department, such as the Department of Revenue or the Secretary of State.
- Complete the proper form
You’ll likely find the forms in a PDF format on your state’s website. They’re usually formatted so that you can fill it out on your computer or device before printing.
- Submit the form and pay the fee
You might be able to submit the form and pay for the fee online if you live in:
- District of Columbia
- New York
- South Carolina
In other states, you will need to submit the form and the payment by mail or in person.
Who pays the sales tax on a used car?
The buyer is responsible for paying the used vehicle sales tax after the transaction is complete. As a seller, once you transfer the title to the new owner, you are no longer responsible for paying any taxes for the vehicle.
How does PrivateAuto vet buyers and sellers?
Both buyers and sellers get verified using the latest facial recognition technology to create a safe experience. Buyers must provide drivers license information, an email address, and a phone number. This personal information is hidden from sellers and other buyers, and is only used to verify the user's identity.
Sellers must enter the VIN for the vehicle and create a profile before listing. A VIN is critical to investigating the ownership of a vehicle and determining whether the title is clean. Buyers and sellers can enjoy peace of mind on PrivateAuto knowing that both parties have been thoroughly vetted.
How do I get a free VIN check?
The National Insurance Crime Bureau (NCIB) provides a free VIN check service. So does VehicleHistory.com and iSeeCars.com. On any of these sites, you can plug in your vehicle’s VIN and see a VIN check report.