Every vehicle purchase involves completing a title for the car, which provides vital information about the vehicle's owner and identification. The Department of Motor Vehicle prepares the title, but before the document can be completed, buyers must provide information on names to include on the vehicle title.
What is Car Title?
A car title is a legal certification of ownership. During the buying process, auto dealers prepare information for the car's title, and buyers can either put one or two names on the title. Dealers submit this information to the DMV, and the department prepares a new car title listing both individuals as owners of the car. Along with outlining the car's owners, vehicle titles include pertinent details about the car such as make, model and year. Auto lenders or finance companies retain the car's title until a owner pays off the loan.
Reasons for Two Names on Title
It's beneficial to put two names on a car title when purchasing a car with another person. This is common practice when spouses buy a car together and share the responsibility of paying for the vehicle. Having two names on the title gives both parties a legal claim to the vehicle. Before selling the car, both parties must agree to the sell and sign the vehicle title to transfer ownership to another party.
Cosigning and Titles
Cosigning a car loan for a friend or relative can help this person qualify for a vehicle loan. But as cosigner, you may not have a legal claim to the vehicle -- even if the primary borrower stops paying the note altogether. Your name appears on the vehicle loan and the lender can come after you for payment in the event of default. When cosigning a car loan for someone else, only agree to this arrangement if the primary borrower agrees to put your name on the vehicle title as an owner. This way, if the primary borrower defaults, you can possibly take possession of the car and remove his name from the title.
Removing Name from Title
Sharing ownership of a car with another person can create problems if you decide to part ways with the other owner. Vehicle titles aren't written in stone; and even if you purchase a car with someone and put both names on the title, you can remove a name. This is a mutual decision by both parties, wherein one party decides to sign over ownership and relinquish his claim in the car. Giving up ownership involves first notifying the lender to have the loan rewritten, and then changing the title with DMV.
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