A miracle happened. You found the perfect car – and it fits perfectly into your budget with room to spare. Everything is working out.
Until you find out that the seller doesn't have the car title.
Does that mean you can't buy the car?
There's hope for you yet. Buying a car with no title is complicated, but it can be done in certain circumstances. You will, however, need to fill out additional paperwork and likely be more cautious about whether or not to leap.
Even still, if the stars aligned to bring you that car, then you need to at least check it out. Keep reading to learn how to buy a car with no title.
Why You Need a Car Title
What's the big deal about getting the car title anyway? You don't need one to drive it.
Actually, you do.
A car title is a document that proves you own the car. It also contains essential information needed to do things like determining your registration costs.
The title proves that you legally bought it from the seller and when in the car's history the purchase took place. If you sell your vehicle, you need to keep a copy of the title for 18 months after the sale as proof of purchase.
If the car isn't in the correct owner's name, then the person listed is the one responsible for it.
Not having the title, filling it out incorrectly, or losing it can create a big mess that can take weeks or months to clear up. And if you buy a car without a title, there's also a higher risk that the sale is dodgy. You might be about to purchase a stolen or flooded car.
What is Title Jumping?
It's not enough to have the title. It also needs to be accurate and reflect the past owner, i.e., the seller of the car.
In some cases, sellers (including both individuals and dealers) will skip putting their name on the title. They do it for a reason, and it's usually to avoid both the title process and paying tax on the car.
Car dealers avoid it because then they'd have to add in extra costs on every vehicle they buy—only to sell it again.
The process is called title jumping
It doesn't matter why they do it: title jumping is illegal in all 50 states.
Even if you buy a car today to sell it tomorrow, you need to change the title. There are exceptions, but these tend to be in circumstances where the owner of the car dies, and their estate or next-of-kin needs to sell it on.
The bottom line: if the title doesn't have the seller's name on it, then they are not the legal owner. If they aren't the legal owner, they have no right to sell you the car. Should they get caught (or turned in), they can be slapped with fines and even jail time.
Step 1: Research the Car
The seller doesn't have a title to hand over. That's a red flag for several reasons. The car could be stolen or salvaged, and you don't want a car that's either of those things.
To confirm the state of the car, you need to check the car's legal status.
First, you'll need to get an official vehicle history report. You can get these from sites like Carfax. Always order your own. Don't use the report the seller gives you.
The VHR tells you who owns the car, whether it was involved in an accident, or if it's the subject of an insurance claim. You'll quickly find out who the vehicle belongs to right now or if it is a flood or salvage car.
If anything looks sketchy, walk away from the purchase at this point. Another car will come along.
If you choose to proceed with the sale, contact the DMV and put in a query using the VIN. The clerk can confirm the title status and answer some (but not all) questions about the car's history within your state.
You'll come back to the DMV later if you decide to buy the car.
Finally, run the VIN through the National Insurance Crime Bureau. The database will tell you if the VIN was once reported as stolen and, if so, whether the police recovered it. A stolen-but-unrecovered car is always trouble, so run away quickly (and consider calling the police).
When Should You Proceed with the Sale?
If you are satisfied that the seller is who they say they are and the VHR and VIN come back clean, then you can choose to go to the next step and start the purchase transaction.
Never buy a car without a title that comes with one of the red flags issued above.
Step 2: Use a Bill of Sale
Because you can't exchange the title upon the completion of the sale, you need another document to record the sale of the car.
Before you pay in full, you need to create a bill of sale.
The bill of sale needs to include:
- Odometer reading
- Sale price
- Items included/excluded
If the seller will get the title later, then note it on the bill of sale. Make sure any other terms show up here, too.
Your bill of sale also needs to list all the personal information for you and the seller, including:
- Both of your full, legal names
- Both of your full, legal addresses
- Both of your phone numbers
Only after you complete the bill of sale should you pay the seller.
Pay with a Check, Bank Draft, or Another Traceable Payment
Avoid paying the seller in cash if they can't provide the title at the point of the transaction.
This is particularly true if the seller promises to provide the title at a later date.
Consider using both an agreement and a payment format that allows you to put the funds in escrow until the terms are met.
Step 3: Get a Duplicate Title from the DMV (Option 1)
If the seller previously registered the car under their name with the DMV, then you can get the official title. But you need the seller to do it for you.
The seller needs to go to the DMV and submit a form for a duplicate title. They'll need proof of ID, the VIN, and mileage. Be sure this is correct: if the information is inaccurate or incomplete, the DMV can deny the request.
It can take a few days or weeks for the DMV to process the form and send you a new title. The title arrives at the seller's address, and then you can complete the sale (assuming step 1 went as planned).
Step 3: Find the Old Title (Option 2)
If the seller didn't register the car, then you have some detective work to do.
Your first step is to hunt down the last title owner. Your VHR should list the current/past owner. If they listed the car in your state, then you can contact the DMV and ask for the previous owner's title information.
Is the last titleholder out of state? The transaction is more complicated, but in theory, you can request the contact details from the DMV in their state.
Once you get hold of the title owner, you can ask them to complete Option 1 (apply for a duplicate title). Then, they can send it to you, and you can register the car in your name.
Is the Car Worth the Hassle?
In an ideal world, the title is only misplaced. In this scenario, pulling the VHR, running the VIN and making a trip to the DMV will get you a new one. When this happens, there's no (title related) reason not to buy the car and continue on your merry way.
However, keep in mind that if the title is more than lost, and you have a case of title jumping on your hands, the process is more complicated. Not only does it take more research and time at the DMV, but you won't have the car for days or even weeks.
It's up to you to decide whether the car is worth it or if it's easier to hunt down a different vehicle (with a title).
Ultimately, it depends on how much time you have, how much you want the car, and whether you are willing to do what it takes to own it legally.
Buying a Car With No Title? No Problem
Buying a car with no title is always a hassle, but in many cases, replacing the title isn't too much trouble. You do, however, need to make sure you do your homework and be willing to bow out of the transaction if things look too dodgy.
Do you have a car without a title that you want to sell? Let us know. If you have a junk car that you need to get rid of, click here to get a free transparent estimate. We'll even pick it up.