Buying a Car Without a Title: What You Should Know

blue car miniature on top of blue tables with car insurance papers

You may want to think twice before buying a car if the seller doesn't have the title. A car title or "pink slip" is the document that tells you who owns the vehicle. If the seller can't produce the title, it could mean they aren't the rightful owner.

While there are some legitimate reasons for someone not having the title—perhaps it was recently lost or stolen—you can ask the seller to replace the title before moving forward. It's a reasonable request, and vehicle owners can often get a new title from their state's motor vehicles department for a nominal fee.

If you're thinking about going forward with the purchase, here's what you need to know first.

Can I Buy a Car Without a Title?

Buying a car from a seller who doesn't have a title could be an option, and may be perfectly reasonable in some cases. However, it's best to approach the sale with caution. Depending on the state and circumstances, selling a car without the title might not be legal.

For example, this could happen when someone wants to quickly flip a car they recently purchased. They might want to leave the title open (in other words, not transfer it to their name) to avoid paying taxes and fees, and then sell it to you. This is called title jumping or skipping, and it's usually illegal.

As a buyer, you could be left high and dry if you're having trouble transferring the title and registering the car in your name. You also might not know if the car has a "branded" title, such as a salvage title, or if there's a lien on the vehicle.

On the other hand, there may be a perfectly innocent explanation for why the seller doesn't have the title on hand. Perhaps the title really was lost or stolen, and they haven't had a chance to get a replacement.

Waiting may be best, but some states have exceptions that allow for legitimate sales without the title. The rules can vary: For example, in Montana, the vehicle may have to be currently titled and registered in Montana and both parties may need to be residents. In Michigan, both parties need to appear together at a Secretary of State branch office.

If you purchased a vehicle without a title, you may need to get a surety bond or bonded title when you register it with your state. Some states may also offer a temporary registration that converts into a full-ownership registration after several years, assuming no one claims the vehicle as rightfully theirs.

You might also want to take a few precautions before going through with the sale:

  • Use the National Insurance Crime Bureau's free VINCheck tool to see if someone reported the vehicle stolen.
  • Check for safety issues and recalls using a free tool from the National Highway Traffic Safety Administration.
  • Order a more comprehensive vehicle history report, which could include information about the vehicle's previous owners, accidents, damage, recalls, services and a title history.

Used Cars Are Sold "As Is"

Purchasing a vehicle from a seller who doesn't have a title is generally only a potential issue when you're buying a used car. With used cars, the lack of a title isn't the only thing to watch out for.

In addition to closely looking over a vehicle history report, you may want to:

  • Take a test drive.
  • Pay for a mechanic to do a pre-purchase inspection.
  • Shop for loans for used cars.
  • Research similar listings or sales and negotiate the price.

While used cars might not have the latest bells and whistles, they can offer significant savings. However, due diligence is important if you want to be sure you're getting a good vehicle for the price.

Make the Deal Safely

Whether it's with an individual or used-car dealership, buying a car from a private seller can come with additional risks. You may have taken your time to review the vehicle, but you also want to make sure the sale and transfer will be easy and legitimate.

  • Look for liens. The seller may have an outstanding loan, which could appear in the liens section of a vehicle history report. If there is a lien, contact the creditor to find out how you should proceed with the sale.
  • Use the proper documents. Look up the sale process with your state's department of motor vehicles. There may be specific title transfer or bill of sale forms you can use. Both parties should sign the documents as required.
  • Don't pay with cash. Aside from the potential risk that comes with carrying large amounts of cash, you may want a paper trail of the sale. Consider using a check, certified check, money order or electronic transfer.
  • Obtain a new title, registration and insurance. Before you can legally drive the car, you may need to get the title in your name, register the vehicle and buy insurance.

If you're feeling pressured to purchase a vehicle quickly, that may be a sign that it's time to terminate the negotiation. High-pressure tactics could lead you to overpay for a vehicle or be a red flag that the seller is actually a scammer.

Get Your Credit Ready

If you plan on financing the purchase, your credit can have a direct impact on your ability to qualify for an auto loan and the rates you receive. Check your Experian credit report and FICO® Score for free, and get insight on which factors are most hurting and helping your credit. Improving your credit might take time, but it could pay off when you go to buy a car and apply for different types of credit accounts.

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