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A car title is a document that proves who owns a vehicle. When you sell your car, the title must be legally transferred to the new owner so that person can complete the registration process.
Beyond indicating who owns the car, the title also includes the vehicle identification number, the mileage at the time of sale and what type of car it is.
How car title transfer works
Transferring a car title consists of three steps, one for the seller, one for the buyer and one for the state.
The seller has to release ownership of the car by signing the title.
The buyer takes the signed title to the state office that handles car titles, often called the department of motor vehicles, or DMV. Some states might require additional paperwork to complete the process, such as a bill of sale or a transfer of ownership form.
Your state DMV issues a new registration and title.
A car’s title is sometimes called the “pink slip,” though it could be any color, really. Regardless of its color, the title is always issued by your state’s department of motor vehicles.
Differences between dealer and private-party sales
When you're buying a new car, a dealer handles the paperwork and you usually receive the vehicle title from your state’s DMV in the mail. But when private parties buy or sell cars, it’s up to them to transfer the title.
States may require the seller to provide basic information about the car, such as the odometer reading and the sales price, which is used to calculate the sales tax.
Before signing the title, check with your state’s DMV to find the proper line on which to sign and how to supply the correct information.
Whose name is listed?
For the seller, the first step is to look at how your name is listed on the car’s title. If your name alone is printed on the title, this means you are the only owner and can easily transfer ownership.
If, however, there’s also a bank or lender’s name on the title (referred to as a “lienholder”), this means you have an auto loan that has to be settled before you can sell. This complicates things, but it’s still possible to sell your car. Call your lender and ask how to sell a car that has a loan and how the transaction should be handled.
In many cases, a car is owned jointly by two people, such as a husband and wife. In this case, there are two ways the vehicle title can be written. The two names might have an “and” or an “or” between them. Generally, “and” means both parties have to sign the title to release ownership; “or” means either person can sign the title.
Visit your state’s DMV website before you sell your car to see what documents are required, where to sign the title and how to handle multiple owners. Find your DMV website here:
If you make a mistake, such as signing on the wrong line, or if you try to erase something from the title, it will slow the process. Either you’ll need to file a second form, stating you made a mistake, or you might have to apply for a new title from the DMV before the sale can be concluded.
Buyer’s next steps
After the title is properly signed by the seller, the buyer must register the car in the new owner's name. In some states, the application for a new title and registration is on the back of the old title. In other cases, you might have to download a transfer of ownership form from your state’s DMV website.
Usually, a temporary registration is issued as soon as the title and proper forms have been presented to the DMV. A new title, in the new owner’s name, will be mailed later.