A certificate of title, also known as a pink slip, will be issued by a state’s Department of Motor Vehicles or equivalent office to represent the ownership of a car and to document any lien holders that have a security interest in the vehicle. In addition to naming the owner of the vehicle -- and lien holders in certain circumstances -- the title will be used to transfer ownership when a car is sold, donated or gifted to another party. The owner or driver in many situations will not have the certificate of title but may still drive the car legally.
When financing is provided for the purchase of a vehicle, the lender will be listed as a lien holder on the title. In most cases the lender will retain the title until the loan has been paid in full. During this time, the owner of the vehicle will not have possession of the title but is legally entitled to drive it. Once the loan has been satisfied, the lien will be released and the certificate of title can be sent to the owner.
Titles held by vehicle owners are commonly lost or damaged, but the car can still be driven legally. While losing the title will not affect the owner's use of the vehicle, she should replace a lost or damaged certificate of title as soon as possible. To get a duplicate title, the standard procedure requires the owner to fill out a replacement form at the DMV, present an ID, pay the replacement fee and provide proof of ownership with a copy of the registration.
If an arrangement has been made with the seller to test drive the car or take it to a mechanic, the car will be driven while the title remains in the seller’s name. If a seller has just paid off the loan to a lender that holds the title, there may be a wait time before the lien holder can be released and the title can be mailed out. Once the seller receives the title, it can be signed and delivered to the buyer. In both of these situations, the buyer of the vehicle can legally drive it.
Unless the buyer and seller go to the DMV together to complete the paperwork for the sale, transferring the title may take a few days to a few weeks. For example, in Wisconsin the time required for the Department of Transportation to process a title transfer to the new owner's name is approximately three weeks. In the interim, the buyer is considered the owner of the vehicle but won’t hold the title. During this time, it is well within the rights of the new owner to drive the car.
