An auto title, also known as a "pink slip," is a legal certificate of ownership issued by the Department of Motor Vehicles (DMV). Among other information, it lists the current owner's name and address, the make, model and year of the vehicle, and the first date sold.
An auto title is a very important document that is often kept in a safety deposit box or other secure location. When selling a vehicle, the title must be signed over by the seller. The buyer then takes the title to the DMV to register the car in his or her name. A fresh auto title is prepared by the DMV and mailed to the new owner, listing the buyer as the current owner. When that buyer wishes to sell the car, he must go through the same process of signing the car title over.
In addition to the owner or lien holder, the auto title also lists the vehicle identification number (VIN). This is a unique number that appears on a steel strip on the dash of the vehicle, inside the driver's door jam, or in the engine compartment. When purchasing a car from a dealership or private party, be sure to check that the VIN on the vehicle matches that on the car title.
The title also lists mileage at the last date of sale. This allows consumers to perform a cursory check to see if the odometer or mileage indicator on the car seems reasonable given the time that has passed since the title was generated. For example, if the title shows that the car had 65,020 miles on it two years ago, and the vehicle's odometer currently reads less than that, this is a red flag. It doesn't indicate foul play absolutely -— there may be a mechanical reason, like a digital chip replacement that inadvertently reset the odometer —- but it requires a good explanation that can be backed up with records.
The auto title also includes the word "salvage" if the vehicle was in an auto accident that the insurance company claimed was a total loss. In this case the car was "junked," then subsequently bought from the junk dealer by a third party to be repaired and resold. When this is done legally, the title shows it as a salvaged vehicle.
Salvaged vehicles sell for far less than a comparable unsalvaged vehicle, giving incentive to some unscrupulous people to keep this knowledge from prospective buyers in order to get full market price. In this case, they may claim to have lost the title. The DMV will replace a lost auto title and in more cases than not, there is likely a problem with the vehicle when someone claims they do not have the title. If not salvaged, the vehicle might be stolen, or there may be some other problem with it. To protect yourself, it's best to insist the seller get a duplicate title from the DMV. If they refuse, it's recommended to pass on the car.
There are several online services that will run a DMV check on any vehicle using the VIN number. For a small fee, the report will reveal the entire history of the car, including dates sold, odometer readings, and if the car has ever been in a reported accident or flood. This is not a guarantee against past accidents or flood damage, as the owner can repair damages himself without reporting them to police or his insurance company. But overall title checks, called VIN checks, provide considerable peace of mind.