Meaning of a Clean Title When Buying a Car

If you're purchasing a used vehicle, the phrase "clean title" may have come up in researching the buying process. A clean title is used to help you determine if a car is worth the asking price and if it's being sold legally, and it's also used by lenders to decide whether or not to grant you financing.

Definition

A clean title is one that has no major recorded damage; it's not a salvage title. The phrase "clean title" is often used as a synonym for "clear title" but they mean two different things. Clear title refers to a car that is free of liens. These two phrases are often used interchangeably, and both are important for buyers in making a decision to purchase a car.

How It's Used

A clean title or clear title differentiates a car from a salvage title. When purchasing a car, a buyer may decide not to purchase a car if it has liens against it or if it has suffered significant damage in the past. Also, a buyer often won't receive financing if the car doesn't have a clean and clear title.

Salvage Title

A car gets a salvage title when it sustains damage that would cost more than the car is worth to repair. Usually the damage must be 75 percent of the cost of the car prior to the damage, but the percentage varies by state. In Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma and Oregon, stolen vehicles are identified as salvage titles.

Warnings

Sometimes, people take a car with a salvage title to another state, where it may be given a clean title. To avoid getting stuck with a car that has had its title "washed," the Edmunds automotive website recommends ordering a vehicle history report, which spans states and looks into the vehicle's entire history.