A certificate of title for a vehicle, at the very least, provides proof of ownership of that vehicle. It is required if you want to register the car, and you must have one if you decide to sell or otherwise transfer ownership of the vehicle. If you buy a car, particularly from a private seller, you must get the title as part of the deal. The title provides other valuable information such as liens on the car.
Basic Information
The certificate of title includes the car's year, make, model, Vehicle Identification Number (VIN) and mileage at the time of the last sale. Ownership information includes name and address, but also shows if there is a lien holder and who it is. When you purchase a used car from a private buyer, check the VIN on the title and the VIN on the plate attached to the car. They must match, as should the owner's name on the title and seller's name.
"Branded" Titles
A branded title permanently labels a vehicle involved in some exceptional event. For example, cars that were flooded during hurricanes have titles that brand them as "flooded." If an insurance company totals a car that was covered with collision insurance, the car's title is branded as salvaged. A branded title is important information because it may be difficult to insure a car with that type of title.
State Differences
In some states, the vehicle isn't branded as salvage unless a certain dollar amount has been paid out on it. In others, just the declaration of total loss is sufficient, regardless of the dollar amount. Some states require titles on all vehicles while others only require titles on vehicles over a certain age. Though vehicle history reports such as Carfax are helpful, according to "Consumer Reports" they are not complete. In a comparison study it found that vehicle history reports may not include information about accidents if the vehicle was self-insured, as many fleet or rental vehicles are. Vehicle history reports also don't show any repair costs below the state's total loss threshold.
Federal Titling
The Anti-Car Theft Act of 1992 established the National Motor Vehicle Title Information System (NMVTIS). In 1996, the Department of Justice notified the states that they must furnish title information on all vehicles that enter and are titled in their state. Full compliance was required by January 2010. As of 2011, only Illinois was not in compliance. The system is a national database of vehicles so states can instantly verify the integrity of a title prior to issuance of a new one.
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