What Is A Car Title?

Essentially a document proving ownership of a motor vehicle, the vehicle title certificate, also known as the auto title, car title, or “pink slip”, is a legal form filed with the department of motor vehicles of a given state delineating what person, business entity, or etc. owns a vehicle. These documents acquired the nickname “pink slip” because in the state of California, the vehicle title certificate used to be pink.

And yes, business entities may own cars.

For example, if you have a car loan, the bank or other financial institution providing that loan is listed on the vehicle title as the owner until the loan is paid off. The bank or lender is usually listed on the vehicle title as the legal owner, while you, as the recipient of the loan against the vehicle would be listed on the car’s title as the registered owner.

Another function of the vehicle title certificate is to serve as the automobile’s ID card...

Vehicle Title Certificate: A Car's ID Card

The car title certificate will list the model, manufacturer and build year of the vehicle. The vehicle identification number (VIN) is typically found on the auto title as well. When purchasing a vehicle, it is very important to make sure the VIN on the car and the VIN on the tile document match.

In some states, where a license plate follows a car throughout its life, the license plate number will be listed on the car title certificate as well. The title certificate will also often list the car’s purchase price, gross vehicle weight, and method of propulsion (diesel, gasoline, electric, hybrid, etc.).

Typically, the car title certificate will additionally list the mileage on the car at each date of sale. This provides buyers with a ready method of verifying the accrued mileage on a vehicle. Almost invariably, the mileage reading on the odometer should be higher than the mileage noted on the title certificate. If it’s lower, the seller has a considerable amount of explaining to do.

Vehicle Title Certificate: The Car's Permanent Record

The title certificate can also be used to glean some clues about the car’s past. A car with a “salvage” notation on its title certificate has experienced some sort of calamity and has, in all likelihood, been reconditioned for sale. This could be due to a horrific accident, floodwater damage, or any number of other reasons. It’s especially important to run a vehicle history report search (VHR) on any car with a salvage title before purchasing it to get a better idea of what you’re getting into.

The VHR will tell you the entire history of the car, including dates sold, odometer readings, and if the car has ever been reported as having been subjected to an accident, flood, hail, or other damage. While this is not a foolproof method of learning all about the vehicle’s past (VHRs only catch information reported to insurance companies or police departments) it is a useful exercise nevertheless. Should you be satisfied the problem is not terribly significant, keep in mind the salvage title follows the car throughout the rest of its life. Should you ever need to sell, you’ll eventually have some explaining to do to prospective buyers yourself

Vehicle Title Certificate: Title Certifiate Vs. Registration Certificate

It is important to differentiate the vehicle title certificate from the vehicle registration certificate. While the registration certificate should always be kept in the car, the vehicle title certificate should be kept in a safe place away from the vehicle. This is because it can be used to transfer legal ownership of the vehicle to another party. On the reverse side of the car title certificate, there is a paragraph declaring transfer of the title to another person. Once signed, it can be taken to the DMV and the car can be legally registered to another individual.