What Is a Bonded Motor Vehicle Title?

Titles issued by the state indicate a car's legal status and record of ownership. However, you may purchase a vehicle that doesn't have a title. To prove ownership, you must apply for what most states refer to as a bonded title.

Significance

Bonded titles, or surety bonds, require assurance that the car you bought doesn't have a problematic background and serve to protect the issuing state from future hassles. If someone later comes along and claims they still own the car you want to title, the bond pays for the state's insurance deductible.

Features

Antiques and rebuilt vehicles, personal imports and even homegrown motor vehicles qualify for bonded status. If you simply walk into a dealership, or buy from an individual, you normally won't need this kind of title.

Considerations

Should you buy a car with no title or are given one, make sure you have proof of that, or at least contact info for the person who gave you the vehicle. The state then runs a check to verify the car isn't stolen or has any liens on it, so the VIN must be intact and traceable. Cars from out of state may require lengthier processing since the Department of Motor Vehicles needs to contact authorities elsewhere.

Cost

States assess the value of the car you're trying to title based on prevailing market prices. Then, the state requires you put down a deposit on top of other titling costs in relation to the car's value, often time and a half market price. But don't worry, the actual bond averages at about $100 for a passenger car.

Misconceptions

Bonded titles don't limit your ability to sell the car nor impact its record, as in the case of liens. The bonded status also has a time limit on it--usually 3 years. Most states do not sell bonds directly. You'll need to go to an insurance agent or currency exchange. Finally, bonded titles are not exclusive to any one state; almost every state can issue them.

Potential

Bonded titles work in your favor. Since you don't have a title at the start, previous ownership remains uncertain. Should someone sue you for ownership of the car and win, the bonding entity pays for any associated costs.