So, you want to know if you can sell a car without a title? The short answer is yes, you can sell a car without a title. This can be a red flag for some people, but you shouldn’t worry, because there can be a logical explanation for this. Things can go wrong, the title may be lost, damaged, or even stolen.
- Why state regulations matter?
- Replace the title
- Selling a vehicle with a lien
- Selling a title exempt vehicle
- Car title FAQ
For example, your vehicle lies abandoned by your late grandpa in the fields and the title somehow was lost among the other papers and you just can’t find it, or maybe a lender holds a lien on your vehicle, or even you never titled the vehicle since you have made a purchase on it. Anything can happen.
Although buying and selling vehicles without proof of ownership in some states is illegal, there are ways to sell a car without a title. Which route you can go depends much on your circumstances, and as well as the state in which you are planning to make this deal happen. After all, having a title is a piece of crucial evidence on how the vehicle was obtained, because cars may be stolen or obtained in some dishonest ways. And even in some countries where this practice is allowed, the untitled vehicle cannot be registered or insured.
We went the extra mile and studied this problem and found out some solutions that may be the answer to your headache. In this article, we will discover 3 methods on how you can sell a car without a title. But before we get into the details let’s discuss the state regulations.
Why state regulations matter?
If you decide to go on the financing route, someone else has to hold on to the title. In many states, the institution that performs the lending is holding the lien and retains the title, in other states the title goes to the owner. And why does this matter? A car title is the proof of ownership if you do not have a title, it means that you are not the owner of that car. The title ties your name to that specific vehicle.
So, if you plan on selling a car without a title in your name, you are doing this illegally, because you are not the right owner and you don’t have the authority to do so. If you finished paying all of your loans it means that the title is in your possession and you have to keep it safe, because it can get easily lost. And here some tips on how you can ensure it doesn’t get lost.
- Don’t leave your title in your vehicle, because anything can happen. For example, someone can break into your vehicle and steal your documents, the person that steals your document will have all the permits to sign it over to someone else.
- Keep your title in a secure place, a place where it cannot get damaged. A safe or a deposit box may keep it safe from the elements and from people that want to take it from you.
- Make a copy of your title. This is easy and can prevent future headaches if you lose your title by mistake. Get to your local photocopy shop and make a copy. With this copy, it will be way easier to replace it in the future since you will have both the vehicle VIN and also the license number.
In some states not having a title is fine but only if the vehicle is considered to be an old-timer and is older than 25 years or more, but even though if you don’t have the title, you still need to have a bill of sale in order to prove in your local DVM that vehicle belongs to you or your relative.
Here are the ways on how you can sell a car without a title
Replace the title
Your car title is a critical piece of paper, without it, you can’t sell your vehicle and make a transfer of the ownership. This document is the proof that you get when you also receive when you pay off your car loan. Until you pay off the loan the lender will keep this document at their office.
These documents may also get destroyed or stolen, you can accidentally spill your coffee mug and destroy the document, or someone may throw it away by accident. This means that you need a replacement for this document before you make a deal with the buyer. So read our instructions carefully in order to do the process the right way.
Every state has different procedures for obtaining a copy of the title, but overall, there are three ways on how you can do this process: First is that you complete an application online by mail or in person. In most situations you will need to contact your local DMV, that is your state’s Department of Motor Vehicles, in other states for example in Mississippi and Georgia, you need to go to the Department of Revenue. We are going to reference the DMV and give you input on how this whole process is going.
How you can apply online:
- Go to your state’s DMV website
- Look for the “Replacement Certificate of Title” link, then read and follow the instructions. Basically, if the address on the title matches with the mailing address, you own the title that you requesting, and if there aren’t any changes to the information that is listed in the title you are going to be able to complete the form online, as in the Wisconsin DMV.
- But in some states, you are going to need this application notarized, and this process cannot be done completely online.
- If you are from Wisconsin for example and you don’t need notarization you can just pay the application fee. This fee is more or less around $20/
- In some states where the notarization process is required you need to mail the application and present it in person at the DMV office in your town.
How to apply by mail:
- Complete the application for the duplicate title certificate. You can fill this application at your state’s DMV website or at your local DMV office.
- Make a photocopy of your proof of identity. (Check with the local DMV to learn what forms of identification they are accepting)
- Go to the notary and get your application notarized.
- Make a check for the fee.
- Send all these items to the address that was listed on the application form.
How to apply in person:
- Go to your nearest DMV office
- Complete the application for the duplicate title.
- Place a proof of identification and notary authorization if needed.
- Pay the fee needed for this document.
The title is usually delivered by mail within 10 business days, but this can vary depending on where you live, some states are really fast when it comes to this process and give you the document right away.
Selling a vehicle with a lien
When you are buying a car using a car loan or a different type of financing from some financial institution, the name of the lender is the titleholder, which means that you don’t own your vehicle until you pay off your loan. A lien has a legal right to a property that is granted to the creditor, and that property is acting as a guarantee if an obligation like repayment of a loan on a car, and if that obligation is not met, the creditor has the option to seize the object that is the subject of the lien agreement.
When the full loan is paid, the lien name is removed from the title and is replaced with the name of the legal owner, and the owner may decide to sell their vehicle with the completed the documentation. But a decision for sale may be made even if the lien holder is not paid in full. The car owner has a few options on the table in order to remove the lien name from the title and transfer the ownership to a different buyer, and we will discuss some ways on how this can be accomplished.
1. Sell the car through a car dealer
One of the easiest and quickest ways you can sell a car with a lien is to make this sale through a car dealership, particularly if this car can be used in a trade-in. Car dealers will find a quick way to finish this and work with the lien holder that is listed in the title.
In this simple process, the dealer makes arrangements for the full payment of the loan balance, using the proceeds from the vehicle to be traded in, or by adding the payoff amount to the loan that is being used to buy the new vehicle.
The drawback of this process is that the seller is going to lose money by going through the dealership. These trade-in deals are less than the car’s value compared to selling it privately. Also, the process for a private buyer requires some extra work by the seller. For starters, the seller has to contact the lender to determine the total amount that is required to pay off the loan, including additional fees that will make the lien satisfied in order to get removed from the holder of the title.
2. Execute the sale of the vehicle at the lender’s office
This is one of the quickest ways to sell a car. You just pay off the loan, then remove the property lien and transfer the ownership. This option is also a good way for the seller to collect its proceeds from a sale involving a lien that has its name on the certificate of title after an eventual agreement has been reached.
Either the seller or the buyer can transfer funds to the lender that owns that car are the documents will be executed to make a smooth transfer of ownership to the buyer, this usually is in one go. It should be noted that you need to make a call in advance at the lender’s local office if someone is available to make this transaction. And also, to make sure if both parties the buyer and the seller are present for the transaction.
Although this may seem like the simplest and easiest option there are also some downsides when it comes to going to the lender’s office to do this business. Most notable is the convenience, and this means that both buyer and seller may travel a long way to make this deal, especially if the lien is in a different state.
3. The buyer pays the lien
If making this deal at the lender’s office is not possible, the buyer may directly pay the lender via wire transfer, or with a cashier’s check. Both methods can satisfy the lien and also these methods can be used to pay the remaining balance that is owed to the seller.
This option may give some extra assurance to the buyer. Mostly because the funds may be routed straight to the lender, which completely avoids sending the money to the seller, who later must transfer the money to the lender for the deal to go through.
Depending on the law in the state that you live in, the buyer may be able to send the paperwork and also the transfer instructions along with the payment to receive the certificate of title directly from the lender.
The drawback with this option is the fact that if there are some proceeds left after you pay off your load there will be some time until the lender issues a check for you. If you did some upgrade for your vehicle and a buyer agrees to pay you 1000 dollars for this. It may take a while for you to get your money. This is the case because you will at the mercy of the lien holder to issue a check for these upgrades and pay you.
You should use an Escrow Account
An escrow account is typically used in the real estate industry, but also this type of service may be used for other transactions, like buying and selling vehicles. These types of services are involving a third party that holds the money until the transaction is finished. These types of services are neutral in every case.
An escrow account will add some extra security to both of the parties because a third party will be able to verify the buyer’s funds, also can confirm the removal of the lien holder, and make the transfer of the ownership in order to finish the transaction.
This service will also add some extra expense to the whole transaction, these expenses are typically shared between both parties, and the price of the fee is usually based on the total amount for which the vehicle is sold.
But, be aware that there are some fake escrow services, especially if one of the parties is persistent in their idea of using a specific service because once engaged, the fundraises can verify if they received the funds, assuring the seller in the process that is ok to release the vehicle.
A fake escrow company may assure a buyer that a lien is clear, and then the title is transferred in order to receive the payment. Because of this, you should always make sure that you are dealing with a reputable agency.
Selling a title Exempt Vehicle
If you live in a state that has a title-exempt bill of sale form it may help you solve this issue on how to sell a car without a title. Some states are not issuing titles to older vehicles, and they have standardized bill of sale forms. These forms the buyer presents when they are registering the vehicle.
For example, if you live in Vermont the state will ask the buyer and a seller of a title exempt vehicle to fill out a special bill of sale, so before you try on selling your car make a research and find if your state has this form, if they do not have, step one is to create your own bill of sale if the state doesn’t have a standardized form.
The second step is to notarize your bill of sale, although you can register a car with a bill of sale a few states are taking this a step further and they ask for the bill of sale to be notarized, this is going to add a layer of extra protection and legitimacy, and also make the registration process smoother. In order to get the bill of sale notarized, you and the buyer need to visit a public notary to get the things done, once you visit a notary and sign a bill of the state you can go to the next step.
The third step involves you filling your state title exempt form and also pay the fees that go along with it. These procedures may vary from state to state. In some states, the buyer or both parties the buyer and seller need to fill out a form for transfer of ownership. In some states, the buyer may be able to register the car with a bill of sale without any action required from you. You should check the local DMV for the specific procedures, you may also need to provide some certificates of inspections from a state-approved inspector.
If the buyer lives out of state you need to confirm that in order for him to be able to register the vehicle.
Car title FAQ
Can I sell a car without a title?
The car title is proof of ownership, it ties the name of the owner to the specific vehicle, it is a very important piece of documentation. Without a title, you can’t transfer the ownership of the vehicle to anyone else than you. So don’t lose this document.
What is a car title?
A car title is a certificate that acts like a proof that you are the legal owner of the vehicle that you have. This certificate is issued by the Department of Motor Vehicles (DMV), and this document contains important info that needs to be accurately updated. For example, if you are buying a vehicle with financing, you will not have the title on your name until you completely pay off the liens.
Can I transfer a title to someone else?
The owner can transfer a vehicle to someone else, and this procedure involves two important steps. Firstly, the seller releases ownership of the car and does this by signing the title. Then the buyer takes the signed title to his local DMV, after this step is completed, the state issue a new title and registration for the new owner.
Who keeps a title to a vehicle?
In most cases, lenders are keeping the title on file, and after you pay all of your liens in full, they will transfer the ownership of your car to you. Then your name will be on the title and you will be able to sell it if you want.
What does it mean if a car has a lien on it?
A car lien is a form of security for the lien holder company. It gives the company that is funding the lien to gain ownership of the property if the borrower does not fulfill their financial obligations. The person that has the vehicle in their possession is not allowed to sell the vehicle without permission from the lien holder.
How do I remove the lien holder?
For you to remove the lien you first need to prove that the lien is satisfied. So, if the lien holder is a bank, you need to prove that you paid off all your car loans in order to get your title at your disposal.
How long does it take to get your title after you buy a car?
This depends on the state you are living in; some states are quicker than others. But generally, titles are sent by mail, and electronic titles and liens are usually issued around 10 days after the lien is paid off. You can expect to receive the title by mail in 15 days from the date you have submitted your title application.