Bonded titles: what they are and when they help you sell

So the real question isn't only "what is it" but "is it the right tool for this car." The answer turns on the car's value, how you came to have it, and what your state allows.

How the bond works

You buy a surety bond from a bonding company, file it with the title application, and the state issues a title. If someone turns up during the bond's term with a valid claim to the car, the bond is what pays them. The size of the bond is tied to the car's value, and the formula differs by state:

• 1.5 times the value, the common rule. Texas sets the bond at 1 1/2 times the value TxDMV assigns using a national reference guide or an appraisal (TxDMV). Alaska asks for a non-cancelable surety bond or cash deposit of 1.5 times the appraised value (Alaska DMV). Idaho uses 1.5 times appraised value (ITD).
• Different value sources. Vermont sizes it from J. D. Power's average trade-in figure (Vermont DMV). Nebraska uses the property tax valuation or the NADA Guide (Nebraska DMV).
• Nevada uses the sticker price. A standard vehicle needs a bond of 1.5 times its MSRP, and a salvage vehicle 25% of its MSRP (Nevada DMV). On an old car, MSRP can be far above what it's worth today.
• Twice the value in some states. Florida's bond must be at least two times the Kelley Blue Book current retail value, and the value on the bond has to match that valuation (FLHSMV TL-70). Michigan lists a surety bond of twice the fair market value as one way a buyer without the seller's title can get one (Michigan SOS), and New Mexico will take a bond worth twice the car's value when no papers exist (NM MVD).

What you actually pay

You don't hand over the full bond amount. You pay the bonding company a premium. The only official figure for that premium in our sources comes from Wisconsin DOT, which says the actual cost of a bond averages 1.5% of the bond value (WisDOT). Wisconsin's lowest requested bond is $2,500, so on a low-value car the premium is a small share of even that floor.

The state may charge its own fees on top. Texas charges a $15.00 administrative fee for the eligibility review at a regional service center.

How long the bond hangs over the car

The bond has a term, and in most states we checked it's three years: Nevada, Florida (three years from issuance), Alaska, Nebraska and Idaho. Wisconsin holds its bond for five years from the title date.

What happens at the end matters if you plan to keep the car. In Nevada, if no claim is made in the three years, the Bonded brand comes off and you can apply for a standard clean title. Vermont says a bonded title generally becomes a full ownership title after three years. If you plan to sell, a buyer may see that brand while the term is running.

When a bond won't get you a title

A bond fills a gap in the paperwork. It isn't a way around a lender, and some states narrow who can use it:

• Gifts and inheritance in Florida. Florida will not issue a bonded title for an inheritance, a gift, a divorce, a transfer between married spouses or a trade, only for the transactions its rules define (FLHSMV TL-70).
• Liens in Texas. If a lienholder recorded within the last 10 years won't give you a lien release or a letter of no interest, Texas won't issue a bonded title.
• Liens in New Mexico. A bond may be used when no title or supporting documents are available, but "not to get around a lien process."
• Residency in Nevada. The applicant has to be a Nevada resident, and the vehicle has to be physically in Nevada.
• Value in California. California requires a REG 5057 ownership surety bond, or an alternative, when the vehicle is worth $5,000 or more and other conditions apply (California DMV).
• Montana's version. A buyer without the prior owner's assigned title can get a title by sworn affidavit, adding a bond when the car is younger than 30 and valued above $1,000 (Mont. Code 61-3-208).

The order to do it in

Check these in order before you pay for a bond.

1. Ask the state if the car qualifies. Don't buy anything yet. In Texas, this is the $15 eligibility review, and the state then sends a notice with the bond amount.
2. Buy the bond for the amount the state names. Texas gives you one year after the notice to buy it.
3. File the bond with the title application.
4. Wait out the term if you want the brand removed, or sell with the bonded title if the buyer accepts it.

Bought on a bill of sale, or given the car

These are the two most common reasons people search for a bonded title. Before you price a bond, check whether your state needs a title for the car at all. Some don't, for older cars:

• Georgia: a 1985 or older model changes hands with a bill of sale and no title (Georgia DOR).
• Vermont: a Vermont-registered car from 2009 or earlier can change hands on its registration plus a signed bill of sale (Vermont DMV).
• Maine: once a vehicle passes its 25th year, Maine stops requiring a title for it.
• New Hampshire: a car built before model year 2000 goes without a title, except heavy trucks.
• Connecticut: once a car is past 20 model years, the state neither issues nor requires a title.

A gifted car is harder in Florida, as above. Elsewhere, the person who gave you the car may still be able to sign the title over or apply for a duplicate. Ask about that before you buy a bond. See car not in your name.

Is a bonded title worth it for a junk car?

For a car you plan to drive or sell privately for real money, a bond can make sense. For a car that only has scrap or parts value, it often doesn't. You'd be paying a premium and waiting on paperwork to sell something a licensed recycler in your state may be allowed to take without a title at all.

That's what the table below is for. It lists the route each state's own pages describe for a car that has no title, so you can see whether a bond is even necessary.

Each row is a summary. The age, value and paperwork conditions are on the linked state source, and they decide whether your car fits.

Selling the car to us

We buy whole non-running and junk cars. If the title is missing or you're weighing a bond, mention a few things when you request an offer: the state the car is in, how you got it, what papers you do have (a bill of sale, an old registration, nothing), and the year, make, model and fault. Put the offer next to the cost of a bond and the wait before you decide. You can sell the whole car as it sits, and pickup is free anywhere in the US.

Questions before you buy a bond? Call (877) 421-6008.

For every no-title route in more detail, see selling a junk car without a title.