Vehicle Titles: Purposes and Uses
When a car is purchased in the United States, it is necessary to register a certificate of title, also known as a car title or a pink slip, in order to establish a person or business as the legal owner of the vehicle. Car registration differs by state; in some, titling and registering a car are the same process, and will be completed simultaneously, while other states may require separate processes. A driver must complete a title transfer or retitle their car if: they are new to the state, they are buying or selling a car, they are gifting a vehicle, they are donating the car, if they need to correct information on the original title, or if they misplaced the original title. Each state may have different requirements and applications for each of these processes, and most will be completed through that state’s DMV system.
The National Motors Vehicle Title Information Systems (NMVTIS) provides information on car titles and vehicle data to prevent auto fraud or theft. The purpose of keeping accurate title histories as well as regularly updating title information and titling vehicles, is to track:
- State of Title and Last Title Date: Ensuring the validity of a car title is crucial to making sure the car is owned legally and all information is recent and accurate.
- Brand history: Brands, referring to descriptive categories which the state motor vehicle titling agencies assign, help indicate the status of a vehicle. For example, some labels may include Junk, Salvage, or Flood. By keeping record of any past and current brands of a car, the NMVTIS prevents customers from purchasing faulty or damaged cars that are unsafe to drive.
- Odometer Reading: Odometer fraud may result in a consumers paying more for a vehicle than the vehicle’s actual worth. Checking the odometer history can help identify discrepancies and questionable information.
- Total Loss History: When a vehicle is deemed a total loss, the damage is usually extremely severe, and driving a vehicle, even if fixed, may be unsafe. Reviewing total loss history can help consumers be cautious and have the proper inspections done.
- Salvage History: Salvage history, like total loss history, indicates severe damage. Reviewing salvage history can help consumers be cautious and have the proper inspections done, to avoid unsafe driving.
Titles histories are kept not only to protect car owners, but also buyers who are looking to purchase used cars. Vehicle fraud and the illegal selling of damaged vehicles can not only lead to financial loss, but potential accidents due to unsafe driving.
Car Title Loans
Some money lenders will offer opportunities for car title loans, where someone who is looking to acquire a loan will, in exchange, give the lender their vehicle title in addition to a fee. Usually, the loan will need to be paid back within 30 days, though specific agreements may be made between a lender and a borrower.
People may acquire car title loans online or in person. In addition to asking the borrower to present their application, their car, their car title, as well as their photo ID, some lenders may also ask for an extra set of car keys or make the borrower buy a roadside service plan. The fee may be up to 25% of the amount borrowed, and most loans have an annual percentage rate (APR), which indicates how much it would cost to borrow the money for a year. The APR is based on the amount borrowed, the interest rate, the fee amount, as well as how long the money is borrowed for. When selling a loan, the lender is required to tell the borrower the APR, as well as the loan amount in dollars.
If the borrower is unable to return the loan within 30 days, the loan may roll over and extend for another 30 days. However, if this occurs, the borrower must pay another monthly fee. This way, car title loans may become expensive, and if the borrower is unable to pay back the loan, the lender can repossess the borrower’s vehicle.
Therefore, before taking out a car title loan, a borrower should:
- Consider his or her other options, including banks, credit unions, family or friends.
- Consider using his or her savings or using credit cards.
- Request an extension on paying the bills with a credit counselor or creditors.
- Make sure he or she can repay the loan by the end of the month.
“Car Title Loans.” Consumer.gov. Federal Trade Commission, n.d. Web. 15 Feb. 2017.
“Understanding an NMVTIS Vehicle History Report.” National Motor Vehicle Title Information
System: Understanding an NMVTIS Vehicle History Report. American Association of
Motor Vehicle Administrators, n.d. Web. 15 Feb. 2017.
“Washington Vehicle & Car Title Transfers.” DMV.org. DMV.org, n.d. Web. 15 Feb. 2017.
Author: Mary Juscin