What is a Bonded Title and How to Get One?

What is a Bonded Title / What Does A Bonded Title Mean? 

A car title provides legal information about a vehicle i.e., vehicle identification number (VIN), owner, etc. You need a title to buy car insurance, register your car, and sell it to other people. Most owners receive their title after they purchase their vehicles. For example, if you buy a new car from a dealership, the dealership will mail your car title a few weeks after your purchase. However, when you buy a used car, sometimes, there could be issues with the title that requires you to get a bonded title.

Bonded title is essentially a title guaranteed by a surety bond ( a type of financial guarantee). A bonded title is the only way for you to get a title when there is no sufficient proof of your ownership of the vehicle. If you need a bond that can help you become an auto dealer, you're looking for an auto dealer bond. These two bonds are commonly mixed up.

Why Do I Need a Bonded Title? 

You need a bonded title for the exact same reasons that you need a regular title, listed below: 

• By state law, you are required legally to register your vehicle with your state’s Department of Motor Vehicles (DMV)
• You need your title to buy a car insurance
• You need your title to transfer car ownership
• If you are stopped by the police on the road, they may ask you for your title and if you don’t have one, you could have broken federal and/or state laws

When Do I Need a Bonded Title?

You need a bonded title if there is insufficient proof of ownership, which can happen due to the following reasons: 

• Your vehicle has NEVER been titled
• You have never received the original title and can't obtain the title from the previous owner/owners (i.e., dealership or previous owner of the vehicle)
• Your name is not on the title and you can no longer reach the person whose name is on the title to transfer the title into your name
• Your title has some major errors, i.e., wrong VIN number and the DMV tells you that your only option is a bonded title

Sometimes, you don't need a bonded title because a replacement title, duplicate title, or the previous owner can help you establish sufficient proof of ownership: 

• If your title is lost or destroyed but your name is on the title, you may not need a bonded title. You may be able to get a duplicate title from your local DMV.
• If you have a Bill of Sale without an accompanying title and there is no liens on the vehicle, you might be able to apply for a replacement title at the DMV
• If your name is not on the title or the title has some issues but you can reach the person whose name is on the title. That person should be able to transfer the title to your name

The best way to find out if you need a bonded title or not is to call your or visit your local DMV. Don’t get a bonded title until your state DMV confirms with you that you need one. Getting a bonded title should be the last resort.

How to Get a Bonded Title, for Most States? 

Although the process for getting a bonded title differs a little bit across states, the process described below largely summarize the main steps involved in acquiring a bonded title for most states.

Step 1: If you don’t have your title, make every effort to find your title through contacting the seller and DMV official. If you finally find the title but your name is not on it, try as many ways as you can to get in touch with the person whose name is on the title. The goal is to have the person transfer the title into your name.

Step 2: Determine if you need a bonded title

• You can get this information from browsing on your state DMV site, call your local DMV, or visit your local DMV in person

Step 3: Determine your eligibility for a bonded title for the state DMV

• Most of the time, you need to be a legal resident of the state to apply for a bonded title. For example, you need to have a Texas driver’s license in order to apply for a Texas Bonded Title
• Your vehicle needs to have been registered or titled in the state where you are applying the title. Out-of-state vehicle would need to be verified by a certified Safety Inspection Station or state law enforcement authorities (i.e., police) before applying for a bonded title

Step 4: Fill out a Bonded Title Application Form and bring the form with the following evidence of ownership in person to the DMV

• Supporting ownership evidences such as Bill of Sale, Receipt, Checks
• Photo IDs
• Bonded Title Application Form for the state where you are applying the title. For example, Texas uses Form VTR-130-SOF 

Step 5: If your documents are approved by the DMV, you will be told the amount of a Certificate of Title Surety Bond you need to purchase, most of the time between 1.5x - 2x the market value of the vehicle (Texas requires 1.5x and Georgia requires 2x) providing the valuation of the motor vehicle from a recognized motor vehicle valuation and pricing sources such as Kelley Blue Book and NADA Guides. Generally, you should have a minimum bond amount of $6000, which costs around $100. $100 is the lowest you can spend on a title bond. If you choose to have a bond value of 1,000, it will still cost you $100. The higher the bond amount, the more coverage you have in case of a claim. Therefore, it is better to have a higher bond value as long as the cost of the bond is the same.

Step 6: Purchase your Certificate of Title Surety Bond through a surety broker

Step 7: Within 30 days of the initial issuance of your Certificate of Title Surety Bond, you would need to apply for a Bonded Title. Complete the Application for Title Form and bring all the documents to your local county tax office 

How Much Does a Bonded Title Cost? 

The cost of a bonded title is largely determined by the cost of certificate of title bond, paperwork admin fees, mail cost, etc. While the cost of title bond is consistent across states, the cost of administrative fees is determined by each state’s DMV or Department of Transportation. 

Cost of Title Bond: 

• Bond Coverage: $1-$6,000. Bond Price: $100
• Bond Coverage: $6,001-$25,000. Bond Price: an additional $15 per additional $1,000 of bond amount, in addition to the $100 minimum bond price. For example, a $7,000 title bond would cost $115 ($100 + $15)
• Bond Coverage: $25,000+ would require underwriting and bond price would depend on credit score and financials of the applicant

Cost of Paperwork

• This cost varies by states. In Texas, the paper processing costs $15. In Georgia, it costs $18. In New York, it costs $10. 

How Long Does It Take to Get Your Bonded Title? 

• On average, getting a bonded title takes anywhere from a week to a month, depending on a lot of factors, including whether your vehicle has been registered in your state and what type of ownership documents you have.

What Is a Certificate of Title Surety Bond?  

A Certificate of Title Surety Bond (aka Title Bond, Lost Car Title Bond) is a surety bond which establish a financial contract between three parties, the Principal (The applicant), the Obligee (Department of Motor Vehicles of the state), and the Surety Company (The Insurance/Surety Carrier issuing the bond). The contract states that if another owner of the vehicle declared on the title bond steps forward with evidence that the vehicle is theirs rather than the property of the principal, the surety company would pay the financial damage to the extent of the bond amount.

Why Do I Need a Title Bond? 

A title bond is a prerequisite for getting a bonded title. It is a form of financial contract required by the state and local DMV authority.

How to Get Your Title Bond? 

You need to provide the required information below on the website of a licensed surety provider and submit your payment.

Information needed for a title bond: 

• Name (as seen on your driver’s license) 
• Address 
• Vehicle Identification Number
• Bond Amount (which is generally 1.5x - 2x the value of your car determined by the DMV or Kelly’s Blue Book)

How Long Does It Take to Get Your Title Bond?

In most cases, once you submitted the information needed for a title bond, you can get a title bond within minutes online or over the phone.

How to Determine the value of Your Vehicle

It varies based on the state.

• Some states provide recommendation or calculator on their DMV site, such as the Texas Standard Presumptive Value Calculator‍
• Some states recommend using Kelly’s Blue Book My Car’s Value Calculator or obtain an appraisal from a licensed dealer or licensed insurance adjuster

FAQs

What Is the Difference Between A Bonded Title and A Regular Title? 

A Bonded Title is guaranteed by a surety bond. Interestingly, it does not ensure car ownership and can be challenged. It is almost like a provisional car title and can be contested for a period of time after issuance, typically 3-5 years, depending on the state. After the period of contest, the bonded title owner can apply for a regular car title. 

What is the Difference Between A Bonded Title and Title Bond? 

People often confuse bonded title with lost car title bond (aka title bond, certificate of title bond). Bonded Title is basically a car title issued by the DMV that is guaranteed by a title surety bond issued by an insurance company. You can get your bonded title only after getting a title bond. A title bond is one of many requirements for obtaining a bonded title. There are paperworks and vehicle inspection that needs to be done before you can get a bonded title.

Do I Need a Bonded Title If I Bought a Car from Out of State?

Typically, if you bought a car from out of state and there is sufficient proof of ownership on your current title, you don't need a bonded title. You just need to follow your state's process to register the car in your home state. You would need a bonded title if you don't have sufficient proof of ownership of the car and the following circumstance applies to you.

• Your vehicle has NEVER been titled
• You have never received the original title and can't obtain the title from the previous owner/owners (i.e., dealership or previous owner of the vehicle)
• Your name is not on the title and you can no longer reach the person whose name is on the title to transfer the title into your name
• Your title has some major errors, i.e., wrong VIN number and the DMV tells you that a duplicate title can’t solve the error

How to Get a Bonded Title for a Car from Out of State? 

The topic above named "How to Get a Bonded Title, for Most States?" answers this question. Generally, if your car is from out of state, you would need an additional inspection conducted by a certified Safety Inspection Station or/and state law enforcement authorities (i.e., police). This is an additional step from other bonded title applications.

If I Own a Trailer, Truck, Camper, Motor Bike, or Even Boat, Does Bonded Title Work for Me? 

Yes, bonded title works for all of the above.

How Can I Get a Bonded Title for a Boat? 

The process to get a bonded title for a boat works exactly the same as that for a car.

Are There Circumstances When You Can Be Rejected a Bonded Title? 

• If you can’t provide enough supporting ownership documents, such as bill of sale, invoice of car sale, copy of check used to purchase the vehicle
• If there is still a lien on the vehicle

If I Disagree With the Bond Amount Determined by the State DMV, Can I Request a Change?

For some states where the state DMV decides on the value of the bond, like Wisconsin, you can acquire an independent appraisal conducted by an impartial person which the DMV will accept. The impartial person could be a independent licensed vehicle adjuster or dealer.

Does the Surety Bond Need To Be Paid in Full at the Time of Issuance? 

It depends on the policy of the surety company. Most surety companies don’t accept partial payment but some may, especially if they use instalment loan companies like Affirm.

How Do I Update My Bonded Title Form?

If you need to update your bonded title form for any reason (i.e., wrong vehicle information, owner name and address, etc.), please start by contacting your state DMV to understand the process. 

Do I Need to Renew My Bonded Title After the Holding Period? 

No, you don't. For most states, your bonded title expires after 3 years. For some states, your bonded title expires after 5 years. Bonded title is a one-time title. After expiration, you can apply for your normal title at your state DMV.

When Can I Get A Normal Title? 

The bonded title will be in force for 3 - 5 years, depending on the specific state. For example, Texas requires a 3 year bonded title holding period whereas Wisconsin has a 5 year holding period. After 3-5 years, you can apply for a regular title. However, for some states, if you can recover the previously issued regular title and submit the complete ownership documents to the DMV prior to the end of the bonded title holding period, you may be able to obtain the regular title earlier and no longer need the bonded title.

I Don’t Know the Information of the Previous Owners of the Car, Can I Request this Information

It depends on the states. Some states allow you to request name of the prior owner if you fill out a form. For example, Wisconsin can provide you the information of the previous owner if you submit a drive record request form to their DMV.

Can I Buy a Car with a Bonded Title? 

Most of the time, it is okay to purchase a car with a bonded title. However, you would need to transfer the owner of the bonded title to your name or buy a branded new bonded title with your name on it. The key is always asking for the title before you purchase the car. While there is extra work involved, you have more leverage to negotiate a lower price with the seller.

The Seller Does Not Have a Title on the Car And Told Me that I Need to Get a Bonded Title. Is It Risky to Buy the Car?

Most of the time, it is okay to purchase a car for which you need a bonded title. You just need to do your research on the car and make sure it is not a stolen car. You may need to go with the previous owner to the police department to inspect the car to make sure that it is not a stolen car. You also want to make sure that the car has no lien on it.

Can I Sell A Car With A Bonded Title? 

You may still sell your vehicle with a bonded title, but you’ll have to tell any potential buyer about it. However, the surety bond would need to be kept in good standing to avoid cancellation by the surety company. Until the title is clear, the individual who acquired the bonded title is liable for the surety bond.