Understanding Car Titles

A car title is a document issued by your state’s DMV or Secretary of State. The title indicates who the owner of the vehicle is, and includes information about the car such as the year, make, model, purchase history, and accident history. Do you know the different classifications for car titles?

How Do Car Titles Work?

Every vehicle starts with a clean title. If you get in an accident, you no longer have a clean title. But in order for the type of title to change, major damage has to occur. What classifies as major damage can vary by the insurance company and by state. After an accident, for instance, your insurance company files to change the car’s title, and then you have a branded title.

It’s important they record every major event that takes place so the next owner is well aware of the vehicle’s history. This is to make sure

Branded Car Titles

By definition, car title “branding” is the process of giving a label other than clean to the title of a vehicle. This is an indicator of what type of history the car has. Vehicle titles are handled by state agencies, so they can vary from state to state.

Typically, buying a car with a branded title means you're buying a used car and it carries a negative connotation. It usually refers to vehicles that have experienced a collision, been in a fire, and/or have flood damage. These vehicles may also have been sold for scrap, or have gone through insurance claims and major repairs.

What are the different title brands? There are four major classifications for car titles. While these can have different names depending on the state you live in, these are the most common title types seen:

  1. Understanding Car TitlesClean – A clean title means the car hasn’t received any major damage that might deem it a total loss. This is the most ideal title to search for when buying a used car.
  2. Clear – Not to be confused with clean, a clear title means there’s no financial lien preventing the vehicle from being sold. Simply put, the car is owned free and clear by the seller, and isn’t tied to creditors or third parties that could claim ownership.
  3. Salvage – If a vehicle is involved in a major accident and is damaged anywhere from 75% to 90% of its value, it’s deemed a total loss and given a salvage title. Be cautious about vehicles with this title – it’s typically not safe to buy salvage title cars. These vehicles may need extensive repairs, may be expensive to insure, or be uninsurable.
  4. Rebuilt/reconstructed – A rebuilt or reconstructed title is given to a vehicle that was repaired after being classified as salvage. Basically, it means the car experienced a lot of damage but was inspected by the state once repairs were done and classified as being “fixed.” The problem with these cars is that even though they’re repaired, they may need further repairs, or may no longer be reliable.

Note that there are other branded titles that some states recognize including lemon, flood, bonded, and junk. Each state’s list of title brands varies, and you can check with your local DMV or Secretary of State to see which brands are recognized in your state.

Title Washing

Do I need to be concerned about title washing? One thing you need to look out for is title washing, especially if you’re purchasing a vehicle across state lines. Title washing essentially washes away a title brand that may not be considered desirable by transferring the title to a state without a certain brand destination. Depending on how a state classifies the names for its branded titles, some title brands may not transfer over from one state to another. This is an easy way for sellers to get rid of damaged cars in a timely manner. In many cases, this is done so that sellers profit more from the sale of these vehicles.

To protect yourself against title washing, always double-check the title brands that are recognized by your state and the state the car came from. Be sure to run a vehicle history report and have the car inspected by a certified and trusted mechanic.

Be in the know about car titles. It’s better to be safe than sorry, and it’s important you understand what different titles mean, and double-check a vehicle’s history for title washing. You don’t want to end up purchasing an unreliable car because you weren’t given an accurate title.

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