What to Know Before Selecting and Buying a Used Car

September 10, 2016

What is a Clean Title?

Buying a used car can be like placing a bet in Las Vegas—sometimes you win and sometimes you lose. The shelf life of any vehicle varies depending on how, where, and what it's used for. Putting your money down on any one in particular is a game of chance. There are, however, ways to make buying a used car much less nerve-wracking upfront, and a lot of that has to do with doing your homework to check the history of the car, the owner of the title, and whether it is clean of any physical or legal challenges. That requires researching everything you can find out, figuring out its value, determining what you're willing to pay, and being willing to walk away if you don't like what you find out.

 

Researching Cars

These days, every manufacturer, whether it's Acura, Chrysler, Toyota or Volkswagen, offers plenty of information about their cars, trucks, and SUVs on their websites. Third-party sites often comb through vehicle ownership lists to deliver independent reports on repair and reliability history for individual model years, while your insurance company can give you a sense of how much it costs to cover damage.

CARFAX is another good resource. The web-based service supplies vehicle history reports to individuals and businesses on used cars and light trucks for American and Canadian consumers. You can check out where a car has been previously registered, when its ownership status changed, its title numbers, history of oil changes, and its recorded mileage at different times. You can also look for possible red flags, such as odometer rollbacks, salvage titles, open recalls, or reports of damage. Simply enter the VIN for the car, and the system will find all the recorded information about the car. The report makes it easy to see the car's history at a glance and if its value lines up with what the seller is asking.

Clean and Clear Title

It is fairly easy and very important to check a car’s title before buying it to make sure it is clean and verify details given by the purported owner. Most used cars sold by individuals do not come with a warranty, so it's especially important to check titles for older model cars that may have had more than one owner. The most recent owner may not have been fully informed before buying the car. 

A clean title usually refers to any car that passes inspection without having any serious physical issues. That means a mechanic, preferably your own, has checked out the car to make sure there were no undisclosed repairs or issues with the car that you haven't been informed about. It's perfectly OK for used cars to have some issues, but you the purchaser should know as much about its history as possible to make an informed buying decision. A clear title means that creditors or parties other than the purported owner have no claim to legal ownership of the vehicle. CARFAX and other third party sites can check the National Motor Vehicle Title Information System (NMVTIS) on vehicle brand history. A “brand” is a descriptive label that states assign to a vehicle to identify the vehicle's current or prior condition, such as “junk,” “salvage,” “flood,” or another designation. By capturing into one system specific information from multiple entities (state motor vehicle titling agencies, automobile recyclers, junk and salvage yards, and insurance carriers), NMVTIS offers states and consumers protection from title fraud, offers detection of stolen vehicles from being retitled, and makes it more difficult for criminals to use stolen vehicles for criminal purposes. A clean title is usually used to refer to any car that passes inspection without having any serious physical issues. This ensures a higher quality car, when all the other features are also taken into consideration. For states in which the license plate stays the same with ownership change of a car, you also should check there are no unpaid state or local parking tickets or other potential liens against the value of the car. An owner is unlikely to reveal that history, so it's incumbent upon the buyer to check.  In terms of title ownership, some people use the terms interchangeably. Be sure to check which definition is meant by the seller. If a lien has been placed on a car, it would mean that any additional cost would be included in the price of the car. Optimally, a car should have both a clear and a clean title. Make sure to ask the owner if the vehicle has both before checking yourself. 

Reasons Why a Title Isn't Clear

If a car has been rebuilt or reconstructed, that means it has a salvage title. While this may still be a good car to buy, it is not a clean title. Depending on the work done and the price being asked, a rebuilt car is often in better shape than a car of the same year that has not had work done. The value of a rebuild can be higher, if better parts or better quality paint were used in the work.

  • A salvage, or junk title, is assigned to a car that has been in an accident and is cost prohibitive to being fixed. It is often referred to as totaled, even though the car is sometimes still drivable. If the car requires repairs that cost more than three-fourths of the car’s original value, it qualifies for a salvage title and therefore does not qualify for a clean title.

  • Hail damage is another issue that can prevent a car from having a clean title. It could be repaired cosmetically and might not be noticeable. However, the metal would be weakened and prone to being damaged easily again. There is no engine damage, normally, when a car has sustained hail damage.

  • A car that has been damaged by flood water also will not have a clean title. This damage is a little harder to notice; however, it is probably one of the more problematic problems in determining whether a car has a clean and clear title. Many cars sustain flood damage in hurricanes, so this is especially something a car purchaser in the South and Northeast should consider checking. You may not see visible damage to the car if it is cleaned up before it starts to rust. The engine would take a lot of work to repair and would be costly. It can also cause mold issues behind the dashboard and problems with the electrical systems. If an older car has new upholstery in the interior, it may be an indication that it was in a flood. Flood damage is more prevalent in coastal areas, as well as along rivers.

  • Fire damage to a car can also be fixed, but there may be some damage not noticed in the wiring system. It could cause serious problems in the future. The damage to the car itself is obvious; paint will not stick to the metal once it has been burned, so parts will have to be replaced. If there was fire damage, similar to flood damage, new upholstery would be an indication of a damaged interior that had to be replaced.

  • The mileage of a car is one of the factors that determines its value. It is important that the mileage be accurate so that the buyer gets a fair price. It is illegal to physically change the mileage of a car. One instance where the mileage can change on a car would be if the instrument cluster was changed. To still have a clean title, such a change must be noted.

Again, have your local mechanic check and inspect all the factors. Some insurance companies may deny coverage if it has a muddy clean and clear title history.
 

Assessing a Car's Value

Another important aspect to consider when buying a car, in addition to a clean title, would be making sure the asking price matches within reason to the value of the car. One useful tool for determining that is the Kelley Blue Book. Condition, mileage, and other factors affect the car's value. As long as the car has a clean title and the Blue Book value is fair, then that helps establish a baseline to negotiate the price.
 

How to Buy a Used Car With a Clean Title on eBay

On eBay, you can search all makes of cars, from Land Rover and Lexus, to Hyundai and Jaguar. You can also shop by type, including convertibles and sedans, and add particular model years if there are features unique to one year over another. In addition, it's helpful to add the words "clean title" to the search. If the seller has certified the car has a clean title, that listing should show up in the search and help narrow your hunt. 
 

Getting to Know the Seller

When investing in a car, it is important to know the reputation of the seller. Top-rated Sellers on eBay help ensure a better transaction. Reading the feedback left by other buyers also helps to make a good choice. There may not be much feedback, unless the seller is a dealer, so the feedback there is even more important to read over carefully. One red flag is whether the seller is willing to let you have the car inspected or someone who purports not to know the history of ownership.
 

Conclusion

When buying cars, knowing the value of the car is only one part. It is also important to check for a clean title that can detail ownership, salvage history, clear liens, and potentially inspection reports. By knowing that a car has a clean title, you're likely to have a lower risk of buying a lemon. Many of the problems that cause issues, that would make a clean title impossible, are often hard to see upon first inspection, even by a qualified mechanic. Using the CARFAX report helps confirm a car does indeed have a clean title.

Some people want to buy a car without a clean title for parts or to rebuild for recreational purposes, like drag racing, so knowing the title is not clean may allow the buyer to negotiate the price. The Kelley Blue Book pricing guide helps negotiations to go easier.

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