What to Do When You Buy a Car Without a Title

Car Title Loan

When you buy a car, you need to make sure it’s the right make and model at a fair price. Just as importantly, you need to make sure a valid title is included in the sale. You can still complete the purchase without a title, but the process is much easier with all the necessary paperwork. However, if you don’t have that paperwork, don’t worry. Dealing with a lost or invalid title is certainly annoying, but it doesn’t have to put your vehicle purchase in jeopardy. Use this resource to learn everything you need to know about buying a car without a title.

Why Is a Title Important?

A title establishes legal ownership of a vehicle. In the eyes of the law, whoever is listed on the title owns the vehicle. Being identified as the owner is important because if you’re not, you lose a number of legal rights:

  • You can’t register the vehicle
  • You can’t insure the vehicle
  • You can’t drive the vehicle legally
  • You can’t sell the vehicle easily

For all intents and purposes, if you purchase a vehicle without a title it needs to stay parked in your driveway. Driving without registration or insurance puts you at risk of tickets, fines, and even jail time, depending on where you’re located.

What Are Some Common Title Issues?

Since vehicle titles are so important, most people preserve and maintain them carefully. But they are also just a piece of paper filled in by hand, meaning that they can easily get lost or even contain invalid information. When you’re buying a vehicle, watch out for these common title issues:

  • The seller cannot provide a title
  • The seller offers a bill of sale
  • The title is not properly signed over to you
  • You lose the title before the transfer is complete

If the title is already in your name and gets lost for some reason, you can typically apply for a duplicate from the DMV.

What Is a Car Title Bond?

This type of surety bond (also known as a lost car title bond or missing car title bond) helps you replace a missing or invalid title. Before the DMV will issue you what is known as a “bonded title,” they need to be sure that your vehicle does not have any other legal owners. You will be required to get a missing car title bond, which holds you accountable if anyone else is able to produce a valid title for your vehicle. There are three parties involved in the bond agreement:

  • Principal – You are the principal, meaning you’re required to obtain the car title bond. As the principal, you also have the final financial responsibility for any claims filed against the bond.
  • Obligee – The state DMV is the obligee, meaning they require you to obtain the bond. By creating this requirement and making the principal financially responsible, the DMV decreases the likelihood that people will try to secure titles for vehicles they don’t own.
  • Surety – The company that issues the bond is the surety, meaning they administer claims made against the bond. For example, if someone claimed to own your vehicle, the surety would investigate the claim. If it was valid, the surety would pay the claim (around the amount the vehicle is worth), then collect that amount from you.

It’s also possible for the vehicle’s previous owner to be the principal. If you bought a vehicle that already had a bonded title attached, the lost title bond does not transfer to you as part of the vehicle sale. The previous owner is still responsible for paying claims, giving you some peace of mind that your vehicle sale is legitimate.

How Do You Obtain a Lost Title Bond?

Contact your local DMV. They can tell you whether you actually need one of these bonds and how to go about getting a bonded title. The requirements are different in every state, but they typically involve these steps:

  • Meet Basic Standards – Some states will only issue bonded titles to vehicles over a certain age and below a certain amount that have no previous title applications on record. There are also states that don’t issue bonded titles at all (but that do have alternative options). Start by confirming you’re even eligible through the DMV
  • Prove Ownership – You will need to prove ownership of your vehicle with a bill of sale, a receipt, or a copy of the check you used to purchase it. If you cannot provide these documents, some states accept a notarized explanation of how you became the owner of the vehicle.
  • Get an Appraisal – Investigate the value of your vehicle using Kelly Blue Book values or the NADA Guide. You might also be allowed to rely on a licensed vehicle dealer.
  • Determine Your Bond Amount – Lost car title bonds usually have to be worth more than the value of the vehicle, often 1.5X or 2X the value. So, if your vehicle is worth $2,000 you may need a bond for $4,000, but that figure refers to the total the bond will pay, not the actual cost of the bond.
  • Find a Surety Company – Locate a surety company like Viking Bond Service that is qualified to issue missing car title bonds in your state. You will need to fill out an application, state the amount you need the bond to cover, and pay a fee based on that amount. In most cases, fees are around $100.
  • Finish the Application – Once you have an active bond, submit proof along with a completed title application to the DMV. You may also have to pay an application or administrative fees associated with getting the bonded title.

Get the Title You Need

Are you trying to register or sell a vehicle you don’t have a title for? You probably need a lost car title bond before you can proceed forward. Fortunately, Viking Bond Service makes it quick, easy, and affordable to obtain the bond your DMV requires. Rely on us for information, assistance, and, most importantly, bonds. If you would like more information before you apply, explore this free resource all about surety bonds.