Home » Articles » Titles » What Does A Clean Title Mean For A Used Car?
If you’re in the market for a new used car, it’s important to understand what a clean title means versus what other permanent types of title brands mean. Before you buy your next used car, make sure the title is clean to avoid buying a car that is ineligible for a title and for the road.
A clean title means that there are no clouds over the ownership, liens, or permanent title brands. A car with a clean title has never been reported to an insurance company as wrecked, stolen, or in an accident. A clean title car has all of the original parts and has not been rebuilt or reconstructed. When you have a clean title in your name, you are free to sell, trade-in, paint it, or otherwise do what you want with the vehicle.
The term “clean” comes from the fact that you can simply read through the title and determine if anything is wrong with it. You might notice that there are no lienholders on the title or any other information on it other than the owner’s information and the vehicle’s description. This means that everything is good with your vehicle.
When buying a used car from a private seller, it’s important to look over the car title to ensure that there are no title brands or other clouds on the title. What are some common title brands?
A bonded title is actually not a permanent title brand. It is a temporary title brand that is acquired through a bonded title process. It is typically safe to purchase a car with a bonded title, but before that, make sure to get the story from the seller. After a period of 3-5 years, the bonded title brand can be removed to obtain a clean title.
A lien title, or lienholder title, means that the owner has a loan out on the vehicle that has not been paid or properly discharged. If the car title has a lien, the seller cannot legally sell the vehicle because the lienholder is technically the owner. Before a car with a lien title can be sold, the lien must be released by the lender and a clean title must be obtained by the seller to sign over.
A rebuilt or reconstructed title is given usually by an insurance company to a vehicle that has been substantially rebuilt. A vehicle with a rebuilt or reconstructed title can be sold, however, it will have additional inspection and insurance requirements with this type of title brand.
A salvage title is a title brand given to vehicles with an insurance claim loss. These types of losses include major damage, theft, or repair. If a vehicle incurs damage that is more than 60% of the value, it is often branded salvage by the insurance company. Sometimes, in certain states, salvage brand vehicles can go back on the road. However, the inspection process for these vehicles and repair requirements are quite strict and can be more expensive to fix up than the vehicle is worth.
A parts-only designation is typically found on a bill of sale or transfer form, not on a title. However, if a parts-only bill of sale is submitted for vehicle title processing, the title may be issued with a salvage brand or other cloud on the title.
When an insurance company has paid a claim for a vehicle and taken ownership from the insured, they have the option of processing the title as a certificate of destruction. In this case, the vehicle is intended to be destroyed and never to be used on the road or registered. It is unlikely that a vehicle with a certificate of destruction can ever be issued a valid title for transfer.
A vehicle with a certificate of destruction can sometimes appear to be in acceptable condition. The insurance company decides to prevent the car from road use to limit its liability in the event that the car is driven and is involved in an accident at a later date. If it is proven that an injury in an accident is because the car had some existing defect, the injured person could claim that the insurance company should not have let the car go back on the road.
Used cars with a clean title are your safest bet if you’re in the market for a used car, but only when you buy them from a trustworthy seller. While most states have laws in place regarding which brands of titles can be transferred over to new owners, you can never be too careful. It’s always best to know what you’re buying before purchasing it.
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