Licensed Dealerships and Title ProblemsWe’re seeing more and more of these vehicle title problems popping up from people that bought cars at dealerships. This is not, you know, buying a car from some guy on Craigslist on the street corner or buying a car on OfferUp or Facebook Marketplace where the seller was kind of maybe sketchy at best. These are people that bought cars from licensed car dealerships and didn’t get a title. Here’s a person who bought a cheap Wrangler. The dealer won’t give me a title, making it impossible to get license plates. And when they went back to the dealer, the dealer laughed at them. Can’t drive their new vehicle because they can’t get titles and plates. How does that even happen? This is a dealership.
Dealership License SuspensionsWell, it is happening. Here’s a new car dealership, Lefon Hyundai in Detroit, that had their license suspended because they were selling cars without titles, selling vehicles, and failing to have a title in possession of the vehicle. They also failed to properly complete the state’s title application. How does this happen? Well, here’s one of the scenarios that can come up that you may not know about as a consumer, but it’s important to be aware of when you’re buying a car from a dealer.
Dealer Financing ExplainedDealers, like consumers, actually finance their cars. If you buy a car, you’re going to get a car loan, and you make payments on it. Dealers have car loans on all the vehicles in their inventory. It’s called floor plan credit, floor plan financing. The word “floor” comes from the cars on your showroom floor—there’s a plan for financing it. So what happens is, you might think, well, the dealer, why do they have to finance their cars? Think about how many cars are on a dealer’s lot. Even if a dealer has 100 cars on their lot, and let’s suppose each car averages $35,000, that’s $3.5 million of inventory sitting on a lot.
Costs for Smaller DealersLet’s say a new car dealer. First of all, most new car dealers have more than 100 cars, and cars don’t cost $35,000 anymore; now they’re $40,000. So that’s a minimum. Even if you have a small mom-and-pop used car store that has 10 cars on their lot, and they are $7,000 each, that’s $70,000. Think about the mom-and-pop car dealer with a little trailer on the corner. $70,000 might be a stretch for them to come up with, so they do this floor plan financing.
How Floor Plan Financing WorksHow does it work? When you buy these cars, whether it’s from an auction, from the factory, or from a trade-in, you contact your lien holder—that’s called a floor plan lender—and you tell them, “Look, I just bought this 2022 Jeep from the auction.” Great, we will pay the auction, wire transfer them the money. You go get the car, you ship it. We’re going to hold the title. And that’s the key: the lender holds on to the title.
Title Holding by LendersJust like you as a consumer, when you finance a car, the bank holds your title too because they don’t want you to sell it without paying them. The floor plan lender wants to do the same thing—they want to hold that title to make sure the dealer just doesn’t sell the car, pocket the money, and not pay them off. Let’s say the dealer bought that car for $22,000; the lender financed it. Now the dealer sells it for a profit. Let’s say they sell it for $25,000.
Dealer Responsibilities and Cash Flow IssuesThey make $3,000. They take the $25,000, take $22,000, give it to the lender, and keep the $3,000 for profit. What they’re supposed to do is send that $22,000 to the floor plan lien holder to get the title. Then, when they get the title, they can get an application, put it in your name, and you’re good to go. They sign the back. However, sometimes if that car dealership is running short on cash—maybe they have to make payroll or pay their rent—that’s where title problems come up.
Financial Mismanagement and Ponzi SchemesThey might have a problem getting the title from the lien holder if they don’t have the cash. They figure, “Well, I’ll just use this buyer’s money to pay some bills, and I’ll pay for it later.” It becomes a Ponzi scheme, like taking your money to pay somebody else’s car off and their money to pay your car off. Next thing you know, the lender has what’s called an out-of-trust scenario.
Risks for Buyers and LendersIf that dealership maybe even only has five cars that they didn’t pay off, it doesn’t sound like a lot, but five cars could be $100,000. If the car dealer is short on cash, they may never be able to come back from that $100,000. If they’re already losing money, they can never pay it back. This results in buyers not getting titles for cars.
Issues for Buyers with Car LoansWhat makes it worse is if you are a buyer who financed the car when you bought it. Let’s say when you bought that $25,000 car, you went to a bank, such as Chase Bank, and took out a car loan for $25,000. They paid the dealer for the car. If the bank doesn’t get the title, you still have to pay that car loan, and you have no title for your car.
Bank Options in Title DisputesYour bank is not going to waive your loan just because the dealer didn’t give you a title. They paid the money. When you get a car loan, the bank writes a check to that dealer for 100% of the car in full, so they’re already out the money. If the dealer doesn’t give the bank the title, the bank can either call the loan in full and make you pay it back or convert it to a personal loan instead of a car loan, increasing the rate.
Advice for BuyersWhat do we recommend you do? If you go to a car dealer and are going to buy a car, have them at least show you the title. They’re not going to give you the title, but before you sign the paperwork or give the money, say, “Show me the title that you have it in your possession.”
Avoiding Title IssuesIf they can’t show you the title, if they say, “Well, we don’t have it, even if it’s at the floor plan lender,” you can say, “That’s fine. Why don’t you get the title first, and then I’ll buy the car?” If they can’t do that, it might be a sign that the dealer is cash-strapped and not someone you want to do business with.
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Welcome MessageHello, for fans of this channel. You’ve been watching this for years. We now have an additional channel where you may be able to see some additional car titles videos along with videos on other subjects that may be of interest.
New Channel IntroductionIf you go to the link below, our channel is Actual Human. It will give you information on vehicle titles, as I know you all like to see, but also information on other subjects such as investigations, commercial insurance, mediation, conflict resolution. All of those videos will be included on that.
Content AvailabilityThe channel, along with the other subjects, will still have videos showing up here on a regular basis, even more than we’ve had before.
Additional Content ScopeBut you can observe development in other markets, even automotive markets that have less to do with vehicle titles, but also automotive industry news, at our YouTube channel at Actual Human and our website actualhuman.com.
Closing StatementLook forward to seeing you there.
As title specialists processing thousands of inquiries annually at CarTitles.com, we’ve seen firsthand the complications that arise from purchasing vehicles without proper documentation. Here’s what every potential buyer needs to know.
While it’s often possible to obtain a title for a titleless vehicle, there’s never a guarantee. The most frustrating part? You won’t know if you can get a title until after you’ve already purchased the vehicle.
Many buyers assume that if a car isn’t stolen, getting a title won’t be an issue. However, numerous other situations can permanently block title acquisition:
Even with methods available for lien release (detailed at CarTitles.com), about 15% of liens prove impossible to clear, regardless of your efforts.
Cars designated as “parts-only” or “junk” face different challenges than salvage vehicles. While salvage vehicles can potentially return to the road after inspection, junk-designated vehicles are permanently barred from titling.
Unpaid taxes, registration penalties, and DMV holds from previous owners can create insurmountable obstacles to obtaining a title.
Probate issues, inheritance disputes, and other legal claims can prevent title transfer, often without any advance warning.
While CARFAX and similar VIN check services provide valuable information, they have significant limitations:
As title specialists, we strongly advise against purchasing any vehicle without a title unless you’re prepared to lose your entire investment. Consider it purely speculative, similar to gambling.
If you’ve already acquired a vehicle without proper documentation, visit CarTitles.com for potential solutions and expert assistance.
For more detailed information and regular updates on vehicle title issues, subscribe to our YouTube channel for expert insights and discussions.
Title Company and Buying Cars Without TitlesOkay, I know that we are a title company obviously our website is cartitles.com but really you have to stop buying cars without titles. All the people that are out there that call us every day, we get hundreds of calls every day, sometimes over a thousand contacts. A lot of people buying cars without titles and certainly in many cases, in fact most cases, you can actually get a title for a car that you bought without a title. However, there is some percentage of vehicles that are not eligible for a title and the problem is there’s no way of knowing in advance if you’re able to get a title.
Risks of Buying Cars Without TitlesSo if you have not already purchased a car and it does not have a title, we never recommend buying a car without a title because there’s some chance that you could never get a title. Now obviously the first thing that people think of is, well I know it’s not stolen. Well, that’s only one possible scenario that will keep you from getting a title. There’s all kinds of other situations that could block you from getting a title. For example, if there’s open liens on it that hold the title back.
Releasing Liens and Other IssuesNow there are some methods you can use to release the lien and you can see that on our website cartitles.com, but those are also not 100% effective if the lien holder is adamant about their lien. In fact, about 12 to 15% of the time, you cannot get a lien release, but 85% of the time you can. But that 15% could be a problem for you. What if the car is reported as parts only or junk? That’s not the same as a salvage. It could be that the car is not eligible for a title because some insurance company put in a notice on the system that it’s not eligible.
Other Scenarios Preventing Title EligibilityWhat if at some point somebody had it and didn’t pay their back taxes or the registration and accrued penalties and that’s at the DMV blocking the title? That could be another problem. In some cases, there are other claims against the car from a prior owner. Maybe it went through probate, maybe it’s in a will. Again, you won’t know these things until you try to get the title. There’s no database or online search you can do to find this out. Sure, you can run a Carfax and Carfax or VIN search or any of these online, you know, cheap $10 VIN checks will give you some information, but they don’t show liens. They only show stolen, about 60 to 70% of the time accurately. They don’t show other claims. They do show things like salvage, but sometimes it’ll say salvage when really it’s a junk.
Limitations of Carfax and VIN SearchesA salvage car can be inspected and put on the road, but a junk car you cannot. So take it with a grain of salt. CARFAX is definitely a place to start, but it’s certainly not the official record of the government. It’s a third-party database, and it does a pretty good job, at least it’s something. But even if you look at their own disclaimers in Carfax or VIN check or any of these online VIN searches, it’ll tell you that it’s not 100%. So you’re always taking a risk if you buy a car without a title.
Final Recommendation for Buying Cars Without TitlesSo our official position is stop buying cars with no titles unless you’re looking at that money as completely speculation. You’re okay to lose it if you can’t get a title and it’s like a gamble. But if you already did buy a car without a title, now you have to do something, and now you can use our website cartitles.com.
Why Mechanics Liens Are Not the Best Way to Get a TitleSo you’ve heard me talk many times about mechanics liens and why they are not the way to go about getting a title. Many times, an automotive shop or even a private citizen thinks, “I’ll just slap a mechanic on this car and get a title for it.” It doesn’t work. It’s the worst way to get a title. In the past, years ago, it was a viable opportunity, but nowadays, you definitely don’t want to use a mechanics lien as a way to get a title. This article tells you exactly why. Here’s an article from The Daily Dot.
A Mechanic’s Ordeal With a LienInterviewing a mechanic who works on cars for a living, somebody brought in a car, dropped it off for work, and never picked it up. His ordeal in even trying to get a title was so long-winded and so torturous that he swore he’d never do it again. Here’s why. For many years, an automotive mechanics lien was a viable way for a legitimate automotive repair shop to get paid for their vehicle. Then, about seven or eight years ago, in 2015 or 2016, many automotive shops started to abuse the process. They used it as a way to get a title for their buddy who lost a title they bought on Craigslist.
Abuse of Mechanics LiensThey put ads in the newspaper that said, “Hey, if you need to get a title for a car, bring it to us, and we’ll put through a fake mechanics lien.” Some shops were using it to get titles for cars that they really didn’t work on that much. The privilege given to automotive shops started to become curtailed. Some states stopped it altogether. There was a period of time in Indiana where they stopped and put a hold on all mechanics liens for about 14 months.
Stricter Requirements for Mechanics LiensNow, even in states that allow them, they do what’s called a level three audit on every case that comes through their file. They make sure that the owner signed a repair order authorizing work. They ensure the car was actually auctioned off to the public, not just given to somebody directly. They make sure all the proper procedures are followed. All the right notifications are followed, meaning certified letters must be sent to the lienholder, the owner, and any interested parties multiple times over the course of two or three months.
The Complexities of the ProcessYou have to send out a certified letter, wait 45 days, send another one, wait 30 days, and put an ad in the newspaper announcing that you’re going to auction off the car to the highest bidder. That way, people will come bid on the car—you just can’t give it to one person. It’s a very complicated process. For the most part, even if you are a legitimate automotive shop and you did work on the vehicle, the easier way to get a title is just to go to a court order title.
The Rise of Alternative MethodsIt’s faster and cheaper, and you don’t have to jump through as many hoops. Because mechanics liens were used improperly for so long, all the states’ DMV commissioners have cracked down on them. In fact, the Commissioners have a biannual meeting where they discuss this issue. For many years, they’ve said that half of mechanics liens are fraud, and the other half are scams.
Oversight on Shops Using Mechanics LiensThey now audit the ones that come through and review records for that shop to see how much they have paid in payroll taxes, sales taxes, and permit fees. This gives them an idea of how big the shop is. For example, if Joe’s Automotive reports $38,000 in sales taxes last month, but they are putting through 10 mechanics liens, that raises a red flag.
A Real-Life Case StudyIn this article, a shop owner faced a difficult process. A customer brought in a car, approved a repair quote, and the shop installed a new transmission. Afterward, the customer never came back. The shop had to go through a mechanics lien, which turned into a brutal process taking seven or eight months, costing thousands of dollars. It was rejected twice because it was audited and found to have minor errors.
The Verdict on Mechanics LiensThis article, shared by The Daily Dot, includes quotes from CarTitles.com stating that while mechanics liens are a legal process allowing a shop to recover costs, they are complex to execute and should only be used when absolutely necessary. States require cars to be sold at auction, and in some cases, shops can only keep the money owed for repairs, with anything over that amount going to the state.
Consider Alternative OptionsThink twice if you’re considering a mechanics lien. It’s certainly not a go-to method if you’re not a licensed mechanic or trying to get a mechanic to do it for you on a car that wasn’t in their shop. Even if you are a mechanic, there are better, faster, and more cost-effective methods available today.
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