Understanding the importance of clear car titles

Buying a used car can be tricky due to misleading information and dodgy practices. It’s common to check a vehicle's mileage, damage, and service records because they are the main culprits of disappointing car ownership experiences. However, before you start questioning the vehicle’s condition or negotiating the final price, you should always confirm if the car has a clear title.

Let’s explore the importance of clear car titles and how to check them before purchasing a vehicle.

What is a clear car title?

Unlike any other branded car title, a clear car title indicates that the vehicle has no outstanding liens, encumbrances, or legal issues that could affect your ownership rights or financial well-being.

In the market, where most cars are bought through finance companies, you should prioritize car title checks to ensure that there are no hidden or undisclosed issues with the lenders.

Benefits of having a clear title on your car

The biggest benefit of having a clear title on your car is the peace of mind, as it indicates that there are no outstanding debts or legal issues associated with the vehicle.

However, there are several other reasons why a clear car title is very important to any car owner or potential buyer, including:

• Ownership confirmation. A clear title confirms that you are the vehicle's rightful owner, giving you legal ownership rights and protection against any potential disputes.
• Access to financing. If you ever need collateral for a loan or additional financing, a clear title is a must. Banks and other lenders require a clear title to ensure the vehicle is free of any collateral for a loan or financing.
• Insurance benefits. Insurance companies could offer you a lower premium if your car has a clear title. Cars with clear (and clean) titles are perceived as lower risk since they do not have undisclosed issues or other liabilities.
• Ease of sale. When the time comes to sell a car, you will have nothing to worry about because the transfer of ownership will be fast and effective. Furthermore, cars with clear titles have higher resale value, which is a pleasing advantage.

Clean vs. clear title – what’s the difference?

In the used car market, it’s common for shady vehicle sellers to use “clean” and “clear” car titles interchangeably despite their distinct meanings.

“Clean” is the only car title brand that guarantees a car has never had a major problem or been in the spotlight of insurance companies. After certain events, insurance companies issue specific branded titles, such as salvage, lemon, junk, or flood.

With a “Clear” title brand, you can only be sure that the vehicle has no ties with lien holders, which could bind you to additional financial commitments.

How to check for a clear car title

Buying a car can be time-consuming, so you might think that checking if the car has a clear title would be even more complicated. However, there are ways to streamline this process and quickly confirm car title status, even using only your smartphone.

Get a vehicle history report

A vehicle history report can provide up-to-date insights into any car, including the car title status, its changes over the years, and information about any liens.

What’s also important about vehicle history reports is that they include other useful information that is crucial to know before buying a car.

For instance, you can check mileage progression through the years (and rollbacks, if any), confirm if the car was involved in an accident, assess the scale of damage made, check its specifications, see historical photos, financial and legal status, and more.

Armed with this knowledge, you can make a more informed purchase decision and avoid unpleasant surprises in the future.

Check with the local DMV

You can also check the car title by contacting the local Department of Motor Vehicles (DMV).

Depending on the state requirements, this method requires you to provide the make, model year, title number, and vehicle identification number (VIN) to proceed with your inquiry online or by visiting the local office.

Using local authorities to determine car title status could seem easy and the least expensive option. However, most local DMVs require visiting a local office, and the states offering online tools could be challenging to use or not working at all.

Be aware of liens title

One of the best features of branded car titles is that every brand has a different but helpful meaning to distinguish them from each other.

For example, the most common branded title is the salvage car title. This title is issued when insurance companies think the car is too expensive to repair, and it’s better to declare it a loss. Similarly, if the vehicle has a debt attached to it or the lender has a legal obligation to the car, it will have the so-called lien title.

Does it mean that you should walk away? Not necessarily, because there’s a way to buy it, even if it has a lien title.

Title transfer and clearance process

The only safe way to transfer car title ownership to you is to find out who has the financial obligation to own the car. If it’s a bank, the seller and the lien holder should talk about the possibility of buying a car legally without shifting the burden of the previous owner's debt onto the seller’s shoulders.

This way, you can buy a car directly from the lien holder, not the person in debt. And if the deal goes smoothly, you’ll get a bill of sale and the title signed by both parties, allowing you to transfer car title ownership to you safely.