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CarInsuranceRates.com » The Insured Vehicle » Vehicle Titles

An Explanation of Different Vehicle Title Types

Types of Vehicle Titles

A vehicle's title classification is meant to describe its current condition in order that a buyer, seller, or insurer may accurately determine its value. A change in a vehicle's title status generally occurs in response to a major event in which the vehicle is destroyed, stolen, or otherwise damaged past the point of an economical repair. When this occurs, insurance companies - in cooperation with local law enforcement and the local department of motor vehicles - will file for a change in the vehicle's title, thus creating a record of the major event for future reference.

List of Car Title / Vehicle Title Types

While the specific phrasing of available vehicle title types will vary widely from state to state, most states recognize the following classifications:

  • Clear Title
  • Memorandum Title (Out-of-State Title)
  • Bonded Title
  • Owner Retained Title
  • Salvage Title (Junk Title)
    • Parts-Only Title (Dismantled Title)
    • Repairable Title
      • Reconstructed Title (Restored Title)
      • Recovered Theft (Theft Recovery)

A sub-brand classification will often accompany any non-clear classification. Sub-brands describe what happened to the vehicle, thereby resulting in the vehicle's current non-clear status. Common sub-brands include:

  • Collision (or) Accident/Incident
  • Flood (or) Water Damage (or) Hail Damage
  • Theft
  • Vandalism
  • Fire
  • Salt (or) Corrosion
  • Other

The title type, when combined with an applicable sub-brand classification, constitutes a complete vehicle title description.

Clear Titles

Clear Titles: A Clean Slate

The majority of vehicles on the road possess clear titles, meaning the vehicle has not experienced any substantive damage since it was manufactured. Note that clear titles are not indicative of complete or outright ownership as the vehicle may be financed or leased by the current driver. In cases such as these, the title would be clear if there was no damage, but the title would list the leinholder as the bank or financial institution to which the driver makes payments.

Memorandum Title (or) Out-of-State Title

Some states require their residents to retain in-state titles for any vehicles they operate. In this case, a memorandum title or out-of-state title can be issued if the primary title resides with a different state. This title recognizes that the owner/driver of the vehicle is an authorized operator of the vehicle within the state in which the memorandum title is issued. This is most common when there is more than one owner of a vehicle or a vehicle's owners lend the vehicle to a third party for extended use outside of their home state (a student might get this kind of title if their parents send them to school or college in another state, for instance.)

Bonded Title

A bonded title may be issued if the individual who retains possession of the vehicle has no proof of ownership or title transfer from the previous owner. This title can remain in effect for as long as three years, after which the state may issue a clear title if the original owner of the vehicle has not made claim to the vehicle and/or no substantive damages have occurred to the vehicle (if damages are part of the vehicle's history, the corresponding title would be issued along with the appropriate sub-brand classification.)

Obtaining a bonded title is a rather lengthy and expensive process which may require:

  • the person seeking title must be a state resident for a certain period of time
  • a physical inspection of the vehicle including notation of the Vehicle Identification Number (VIN)
  • a written explanation of how the individual came into possession of the car (preferably corroborated by paperwork such as an invoice)
  • notarized statements from parties familiar with how you came to be in possession of the vehicle

Owner-Retained Title

An owner retained title is issued when an insurance company has declared a vehicle to be a total loss yet the owner retains possession. The vehicle must remain registered and legally drivable; otherwise, the appropriate classification of salvage title would be issued to the vehicle owner.

Salvage Title (or) Junk Title

A vehicle that has been damaged and would cost more than 75% of its original value to repair (75% is the national standard but this may vary from state to state) is considered to be a total loss, resulting in the issuance of a "salvage title" or "junk title." Once a vehicle has been titled as a salvage vehicle, it cannot regain its previous clear title status. Additionally, it is unlikely that a lender, private bank, or credit union will finance any vehicle with a salvage title due to its significantly reduced resale value.

A junk or salvage vehicle is not eligible for road use and, in some states, it may never again be re-titled. In other states, a salvage title simply means that additional repairs must be completed (and those repairs inspected or certified by a state-authorized mechanic) before the car can be legally driven again.

  • Parts-Only Title (or) Dismantled Title
    Parts-only salvage titles, also known as dismantled titles, occur when the vehicle is beyond repair due to extensive damage to a major component which places its repair value past the state-recognized maximum. In this case, a salvage title vehicle can be re-titled as a parts-only title, which allows the owner of the vehicle to retain possession while the vehicle's constituent parts are sold or until it can be broken down for scrap metal.
  • Repairable Title & Reconstructed (or) Restored Classifications
    If the damage sustained by a vehicle renders it inoperable but repairable, a repairable title can be issued. This title will remain in place until repairs have been completed and inspected by an authorized agent of the state, after which a reconstructed title or restored title is issued.

    Reconstructed / restored vehicles can operate on thoroughfares within the state; however, if the owner of the vehicle moves to a different state, they may have to have their vehicle inspected once more by a mechanic or inspection authority authorized by their new state of record.
  • Recovered Stolen Vehicles (or) Recovered Theft Vehicles
    11 states consider stolen vehicles as a subordinate class to salvage vehicles, including Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma and Oregon. Additional states - typically those which border another country or have highly-trafficked ports of entry - may only choose to issue titles of this type depending on how long the vehicle was missing.

    The prevailing thought behind a specialty classification for stolen vehicles has everything to do with what may have occurred to the vehicle while it was missing. If, for example, the original engine block of a vehicle was swapped with a faulty or older version but the vehicle still ran fine after recovery, there would be no mechanism to initiate further inspection of the vehicle were it to be sold or its ownership transferred in the future; in such a case, consumer could find themselves purchasing pre-owned vehicles with faulty or overly aged components, thus making the vehicle worth comparatively less but for which they would pay full market price. With a recovered theft title, the purchaser knows to have a mechanic inspect all the components of a vehicle for suspicious indicators instead of the usual checks that a mechanic would otherwise perform.

Thinking of Buying or Insuring a Vehicle with a Salvage Title?

Salvage title vehicles are a great bargain if you can find one that has been restored to optimal working condition by a reputable mechanic, body shop or dealership. If not, you may be putting yourself, your salvaged car's occupants, and other drivers on the road at risk. Always have a mechanic you trust verify the safety of any salvage title vehicle you might buy, and remember: if the price is too good to be true, it probably is!

» Read more about Insuring Salvage Title Vehicles

How to Transfer Your Title and Registration

How to Transfer Your Title and Registration

If you plan to sell your vehicle or give it away as a gift, you will need to transfer the title to the new owner. The new owner will also have to register the vehicle under his/her name. A similar process takes place when you move out of state. Within 30 days of your relocation, you must transfer the title of your vehicle and obtain registration for your new state of residence. In what follows, we'll walk you through the title transfer and registration process from beginning to end.

State Variations

Each state has different laws governing the transfer of car titles and the vehicle registration process. Before you begin the transaction, check with your local department of motor vehicles to make sure you complete the process properly.

In some cases, you can void the legitimacy of your vehicle's original title if you make any errors on the document, so accuracy is critical. If you are buying a new vehicle, the guidelines for an original title and initial registration do not vary much by state. When you buy a new vehicle, you will receive the title to the vehicle or a lien if the vehicle is financed. You can then obtain new registration for the vehicle or transfer your old vehicle's registration and plates to the new car.

Necessary Documents and Information

When you transfer ownership of a vehicle or obtain a new title/registration, you will need several documents and pieces of information, including:

  • Original title to the vehicle
  • Proof of insurance
  • Lien documents if title indicates the existence of a lien
  • Odometer reading

The Process

If someone has purchased your used vehicle or you are giving your vehicle to someone as a gift, you will need to sign the vehicle's title in the place indicated. In most states, this signature must be notarized. This means you need to pay a notary public to sign and stamp in the place indicated on your vehicle's title. The buyer may also have to sign on the title. Some fees may be associated with the transfer of title. The seller of the vehicle has two options regarding the vehicle's registration. First, the seller can surrender his/her former vehicle's plates and registration to the local motor vehicles department. Alternatively, you can visit the department of motor vehicles to transfer the existing registration and license plates to another car that you will register under your name.