What Is a Car Title?

By Larry Anderson and the Mercury Team

Buying a car involves a lot of paperwork, but when the dust clears, the most important document is your car title. In this guide, we’ll break down everything you need to know about car titles, including the different types, how to transfer or replace one, and why keeping it up to date matters. We’ll also explain how your title can affect your car insurance options, especially if you want affordable, reliable coverage.

What is a Car Title?

A car title is a legal document that proves you own your vehicle. It’s issued by your state’s Department of Motor Vehicles (DMV) or similar agency, and it includes important details like the car’s vehicle identification number (VIN), make, model, year, and your name as the registered owner.

You’ll typically receive the title when you buy a car outright or once you’ve finished paying off a car loan. If your vehicle is financed, the lender usually holds onto the title until the loan is paid in full.

A title is required for situations like selling, gifting, or transferring a vehicle, so it’s important to keep it somewhere secure but accessible—e.g., a locked file cabinet (and not your car). If it ever gets lost or damaged, you’ll need to request a replacement through your state’s DMV, which usually involves a bit of paperwork and a small fee.

Types of Car Titles

Car titles can tell you a lot about a vehicle’s past, and not all titles are created equal. Whether you’re buying, selling, or insuring a car, here are the most common types you should know about:

• Clean title: A clean title means the car hasn’t had any major damage and hasn’t been declared a total loss by an insurance company. It’s usually the easiest to sell or insure.
• Salvage title: A salvage title means the car was badly damaged, often in a crash or flood, and declared a total loss. These vehicles can’t be legally driven until they’re repaired and pass inspection.
• Rebuilt (or reconstructed) title: This goes to a car that was once salvaged but has since been repaired and approved for road use. Still, some insurers may have restrictions.
• Bonded title: If you bought a car without the proper paperwork, you might need a bonded title. It includes a surety bond that protects against ownership disputes.
• Junk title: The vehicle is beyond repair and only good for parts or scrap.
• Certificate of destruction: This means the car is permanently out of commission. It can’t be registered or driven again.

Title vs. Registration

A car title and vehicle registration might seem similar, but they serve two different purposes. 

• Your car title proves that you legally own the vehicle.
• Your registration is what gives you the legal right to drive the car on public roads.

You’ll get the title when you buy the car (or once you’ve paid off the full loan). Registration is something you handle through your state’s DMV and renew regularly, usually once a year.

Ultimately, you need both to drive and insure your car. Insurance companies use the title to verify ownership and the registration to confirm the vehicle is legally on the road. Skipping either can cause issues, especially during claims or ownership transfers.

Can I Register a Car Without a Title?

In most cases, you can’t register a car without a title. Registration usually requires proof that you legally own the vehicle, and the title is that proof. However, some states offer exceptions or temporary solutions if the title is lost, damaged, or missing, especially if you recently bought the car in a private sale.

If you don’t have the title, your first step is to contact your local DMV. They can guide you through applying for a duplicate title if it’s simply lost or a bonded title if there’s no clear proof of ownership.

It’s important to get these issues sorted out before you try to register the car or get insurance. “One of the first things we look for when setting up a new policy is proof of ownership. If the title’s missing or not in your name yet, it can delay the process, especially if you just bought the car. Make sure to get those details sorted ahead of time to make everything a lot smoother,” says Larry Anderson, Director of Underwriting Operations

How to Transfer a Car Title

You’ll need to transfer a car title anytime ownership changes, whether you're buying, selling, gifting, or inheriting a vehicle. Here’s how the process typically works:

For the Seller

1. Sign the title: Fill out the seller section on the back of the title, including your signature, the buyer’s name, and the current odometer reading.
2. Complete a bill of sale: Required in many states as extra proof of the transaction.
3. Hand over the title: Give the completed title and bill of sale to the buyer.

For the Buyer

1. Visit the DMV: Submit the signed title, bill of sale, and your ID.
2. Complete a title transfer form: Some states require this separately.
3. Pay title transfer fees: Fees vary by state.
4. Register the vehicle: This is usually done at the same time to get license plates and registration.

Check your local DMV for exact steps, as timelines and requirements can vary. It’s also important to note that when you buy from a dealership, the dealer typically handles the transfer paperwork.

What Happens If There’s a Lien on the Title?

If your car is financed, there’s likely a lien on the title, meaning your lender still has a legal claim to the vehicle until the loan is paid off. The lienholder (usually a bank or credit union) is listed on the title, and you won’t be able to fully transfer ownership or sell the car without their permission.

Once you’ve paid off the loan, the lender will send you a lien release, which lets you update the title to your name only. Until then, they technically share ownership with you.

Insurance tip: A lien won’t stop you from getting car insurance, but full ownership can matter for certain claims, like if your car is totaled and you’re owed a payout.

How Can I Remove My Name from a Car Title?

There are a few situations where you might need to take your name off a car title, like if you’re selling the car, giving it to a family member, or going through a name change after marriage or divorce.

The process is pretty straightforward: Head to your local DMV (or their website), fill out a title transfer form, and bring your ID. You might also need a bill of sale or other paperwork, depending on your state.

Once it’s done, make sure to let your insurance provider know so they can update your policy and avoid any future mix-ups.

What to Do If You Lose Your Car Title

To get a replacement, contact your state’s DMV or visit their website to fill out an application for a duplicate title. You’ll usually need to provide proof of ID, your vehicle’s VIN, and pay a small fee. Processing time can vary, but it usually takes a few weeks.

To avoid the hassle in the future, keep your title somewhere secure, like a locked drawer or fireproof safe, and never leave it in the car. Each state has slightly different rules, so always check your local DMV’s site for details.

Why Your Car Title Matters for Insurance

Your car title is important for insurance, too. When you’re getting a quote from an insurer like Mercury Insurance, the title helps confirm ownership and can affect your coverage options.

For example, if your car has a salvage or rebuilt title, it might limit the types of coverage available or impact the car’s insurable value. That’s why you need to make sure your title is accurate and up to date before you buy or sell a vehicle.

Not sure where you stand? Mercury’s team is here to help, so reach out to a local agent with any title questions.

Conclusion

Whether you’re buying, selling, gifting, or just updating your records, keeping your title accurate and up to date helps everything go smoothly.

It’s also an important factor when shopping for cheap car insurance. Some title types, like salvage or rebuilt titles, can affect your coverage options or how much you’ll pay. That’s why it’s smart to make sure your title is clear and up to date before getting a quote.

Our team is here to answer your questions and help you find affordable, reliable coverage, no matter where you are in the title process.

Contact us today for a fast, free quote!