What Is a Certificate of Title for a Vehicle?

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A certificate of title, or “pink slip,” is a legal document that says who owns a specific vehicle. It displays standard information such as the owner's name and address, the vehicle identification number and license plate. It's a record of ownership that also serves a variety of purposes over the life of a vehicle.

Listing Lien Holders

  • Liens are placed on vehicle titles to protect the interest of creditors who are owed money by the owner of the car. The most common type is placed against vehicle titles by lenders that also provide financing. Mechanic’s and storage liens are executed for non-payment of repairs or vehicle storage. Both types are recorded with the state DMV or similar office and must be paid in full before the vehicle can be sold.

Transferring Ownership

  • A seller must sign the certificate of title to release ownership to the buyer. The new owner must complete the appropriate information to accept that ownership. The title and any other required documentation can be submitted either by mail or in person at a DMV office. After confirming there are no liens to get in the way of the transfer, the DMV prints and mails a certificate of title listing the name and information of the new owner.

The Role of Title Brands

  • Events such as major collisions, theft or flooding can be listed as "brands" on a vehicle title. The title gets a brand when the vehicle is damaged badly enough that repairs are not cost effective. After the insurance company writes off the vehicle, a “salvage” designation is placed on the title by the DMV. Brands stay on a vehicle title as long as it remains on the road.

Collateral Use

  • A vehicle owner can use a certificate of title to obtain a loan, using the car as collateral. The title goes to the title loan company, which becomes a lien holder. These are usually short term loans that allow the vehicle owner to borrow up to 50 percent of the value of the vehicle. When the title loan and all related fees have been satisfied, the loan company releases the lien and the DMV removes it from the title.

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