Welcome to an eagerly awaited video that covers updates on vehicle titling, addressing various scenarios such as complicated lien releases, mechanics liens, the Vermont loophole, and abandoned vehicles. In this comprehensive guide, we’ll explore the changes in laws as of January 1, 2023, how they might impact your ability to obtain a title, and the best practices for resolving title problems.
A vehicle title is a legal government document issued exclusively by government agencies, commonly known as the Department of Motor Vehicles (DMV) or Department of Transportation. While each state’s titling process may seem challenging, it’s crucial to understand that the rules are federally mandated.
Using the state of Missouri as an example, we’ll discuss the general titling requirements. Typically, you have 30 days from the purchase date to title the vehicle. Essential documents include a properly signed certificate of title, an application for a new title in your name, and an inspection of the vehicle’s VIN number and odometer reading. Additional requirements may include a safety inspection and lien release if applicable.
Titling costs are generally affordable, ranging from $5 to $50, assuming all paperwork is in order. However, if you lack necessary documents, the process can become more complicated.
One alternative method is the “Vermont loophole,” allowing individuals to obtain a registration for vehicles 15 years or older without presenting a certificate of title. However, this loophole comes with downsides, such as the need to pay sales tax to Vermont and potential challenges with your state’s registration requirements.
Bonded titles offer another option, involving a surety bond and an affidavit. While this method can be effective, it may come with downsides like a stamped “bonded” label on the title and potential limitations on moving the vehicle to certain states.
Mechanics liens are a process generally reserved for licensed automotive facilities. Filing a fraudulent lien can lead to serious consequences, and many states are actively working to prevent misuse of this method.
Claiming an abandoned vehicle might seem like a straightforward solution, but it often involves legal proceedings. In Pennsylvania, for instance, the property owner must follow specific methods, including involving the police or pursuing a court order.
For a smoother and more direct approach, consider a court order title. This method involves filing a petition, an affidavit, and a letter of non-interest directly with the court in your jurisdiction. The court can then issue an order to the DMV, simplifying the process and bypassing potential bureaucratic hurdles.
Navigating the landscape of vehicle titling in 2023 can be complex, but understanding your options and choosing the right path can make the process significantly smoother. While alternative methods exist, opting for a court order title may be the most efficient and hassle-free solution. Remember, working with the court can often be more advantageous than navigating the complexities of the DMV.
The used car market has been thrown out of balance for the past few years, and one reason for this is auto leasing. What does auto leasing have to do with the used car market?
When a car dealer, whether new or used, needs inventory for their lot, they cannot simply call a factory to request used cars, as no factory can manufacture used cars. For new vehicles, a Ford dealer can contact the factory and request new Ford F-150s or Mustangs, but there is no such option for used cars.
So, where do used cars come from? One source for dealers is trade-ins. When someone trades in their old vehicle for a new one, the dealer can use that trade-in as inventory for their used car lot. However, by definition, the dealer will always have fewer used cars than new cars sold. For example, if a dealer sells 100 new cars in a month, they will only have a maximum of 100 used cars to sell.
However, not all customers trade in their cars when purchasing a new one. Some simply buy a car without a trade-in. This means the number of trade-ins available may be reduced, leaving the dealer with only 50 trade-ins, for example. Furthermore, some of those trade-ins may not be desirable to sell on the lot. They could be old and beat up with high mileage or newer but not fit the dealer’s inventory.
For instance, if a Ford dealer received a Ferrari as a trade-in, they would not put it on their front line. Similarly, if a dealer gets a high-end Acura or a low-end Kia, they might only put it on their lot if it matches their demographic. It’s unlikely that customers would visit a Ford dealer to purchase a base model Kia.
Let’s say you have 20 or 30 trade-ins available monthly to sell on your lot. However, you’ll need to bridge that gap if you aim to sell as many used cars as new ones. With 20 or 30 nice trade-ins, you’ll still require an additional 70 vehicles per month to put on your lot. But where can you get these cars?
The answer lies in auctions, and the two primary auction companies are Manheim, which holds auctions almost every day, and another company. These auctions acquire their cars from two primary sources: rental cars and trade-ins from people who buy new vehicles. After two or three years or a certain number of miles, rental car companies such as Hertz, Enterprise, and Avis sell their cars at auction, and dealers are there to purchase them.
Another significant source of used cars is off-lease vehicles. In the past, many new car purchases were made through leasing. When you lease a car for two or three years, you return the keys to the dealership at the end of the lease and may purchase a new vehicle or leave without making a purchase. However, when you return the leased car, the dealer does not always keep it. They may have the option to keep it, but often these cars also go to auction. Regardless, that lease turn-in becomes additional used car inventory.
Nowadays, people are not leasing cars as frequently as they once did. Instead, they finance, pay in cash, or obtain loans from credit unions. We will discuss the reasons for this in a moment. However, the decrease in leased vehicles being returned to the market has significantly impacted the used car market, particularly regarding the quality of the used cars available.
Consider two cars: an off-lease vehicle where the previous owner drove daily and took care of it, likely receiving free maintenance during the first few years, and a rental car parked right next to it. Which one do you think is in better condition?
Thousands of drivers likely drove the rental car over three years, and each driver may not have taken good care of it. They may have driven it recklessly, hit curbs, or driven over bumps, without giving much thought to maintenance. The rental car company aims to make the car last for two or three years and then return it to the auction. Therefore, they will only do the bare minimum maintenance required to keep it running, such as basic oil changes, rather than using high-quality synthetic oil and performing extra oil changes. The rental car company only wants to spend what is necessary because they do not own the car and will eventually dispose of it.
Leased cars were generally of better quality and inventory. Another advantage of leased cars was that they were often better equipped. When you rent a car, it is usually a base model with no extra options, and the color is generally basic, such as white, silver, or gray. However, when people purchase a car for personal use, they prefer a more customized, higher-end model with features like a sunroof, digital dashboard, and XM radio. On the other hand, lease cars were usually more basic, without a sunroof or high-quality wheels.
Nonetheless, these off-lease cars were valuable inventory for dealers because they were more personalized. This factor was critical in the resale market.
What does this mean for the used car market? Well, dealers and used car marketers no longer have the same volume and inventory quality. As a result, prices for used cars have increased, especially for off-rental cars previously sold for mediocre prices. Now that they are the only option, these basic cars sell at higher prices.
Meanwhile, off-lease cars, which are of better quality, are highly sought-after and sell for top dollar since they are rare. Instead of comprising 30 to 40% of the available inventory, these high-quality cars are now more like one in ten, making them like diamonds in the rough. To complicate matters, the lease buyout process has changed. In the past, at the end of your lease, you could opt for a lease buyout instead of returning the car to the dealership, but this is no longer the case.
Here’s an example: let’s say you had a lease buyout option of $20,000, a fixed amount at the end of the lease that you can pay to keep your car. This number was often higher than the car’s actual value in the past because leasing companies inflated the buyout option to reduce payments, making it more attractive to lease a car. However, with the wild fluctuations in the used car market in 2020 and 2021, many older leases had a buyout option of $20,000, while the car’s value might have been $25,000 or $26,000.
Consequently, many people at the end of their leases chose to keep their cars instead of simply returning them to the dealership, as they realized the car’s value exceeded the buyout amount. As a result, more vehicles were kept out of the marketplace, further reducing inventory for dealers and increasing demand for used cars.
The new car market is highly competitive now, making it a seller’s market for buyers. Leasing companies no longer need to be as aggressive with their lease deals, resulting in a decline in the popularity of leasing. This, combined with other factors, has led to fewer new cars being leased, resulting in a shortage of high-quality, desirable used cars hitting the market. This shortage impacts both used and new car buyers, as many high-end, quality used cars have displaced new car sales. For example, someone might visit a dealership to purchase a new car only to discover a two-year-old off-lease vehicle with 20,000 miles that is just as appealing and less expensive.
However, finding such a high-quality used car has become increasingly complex, as off-rental cars are generally not good quality. This has thrown the used car market into turmoil, making it challenging for dealers to acquire quality inventory.
Get expert advice for buying or selling your car with TelAdvice.com. Our team of automotive experts can provide you with tailored advice to navigate the process with confidence. Schedule your consultation today and take the first step towards a stress-free buying or selling experience.
https://cartitles.com/wp-content/uploads/2023/03/teladvice-logo-transparent-300×165.pngTalk to an Expert
Can you get a title for a car that is not paid off yet? The short answer is yes, it’s possible to obtain a car title for a vehicle that isn’t fully paid off, but the process can be more complicated than it would be for a car that is fully paid off. Additionally, your ability to get a title on a vehicle that still needs to be paid off can also depend on whether or not you live in a title-holding or non-title-holding state.
When you finance a car, the lender typically holds the title until the loan is paid off. Once the loan is paid off, the lender will release the lien on the title, and you will receive a clear title in your name. However, if you need to obtain a title for a car that isn’t fully paid off, there are a few options available:
If you’re still making payments on a car, your lender will hold the title until the loan is paid off. However, in some cases, the lender may be willing to release the lien on the title before the loan is fully paid off. This will allow you to obtain a clear title in your name. You’ll need to contact your lender to discuss your options.
If you can pay off the remaining balance on loan, the lender will release the lien on the title, and you’ll receive a clear title in your name. This may be the most straightforward option if you can afford the remaining payments.
If you’ve lost your original title, you can obtain a duplicate title from your state’s Department of Motor Vehicles (DMV). However, if the car isn’t fully paid off, the DMV may require proof that the lender has agreed to release the lien on the title. If you’re in a title-holding state and lost your title, your DMV can issue you a duplicate lien title. Applying for a duplicate title does not mean the loan will be removed. This is a physical and valid car title, but until the loan is paid in full, the lienholder’s name will appear on the front.
Getting a title for a car that is not paid off can be challenging because the lender typically holds the title until the loan is fully paid. The lender has a lien on the title, giving them the legal right to repossess the car if the borrower defaults. Since the lender is listed as an interested party in the title, you’ll have to get their permission before you can do anything with the car or the title.
In summary, while it’s possible to obtain a title for a car that isn’t fully paid off, the process can be more complicated than it would be for a vehicle that is fully paid off. It’s best to work with your lender or a professional title recovery service to ensure that the process is handled correctly and that you legally own the vehicle. Remember, driving a car without a clear title can be risky, so taking the necessary steps to obtain a clear title as soon as possible is essential.
Want a CarTitles.com professional to do it for you?
For as little as $159 for most processes, we will save you the headache and prepare all of the car title paperwork needed to get you a new title. Simply choose the title recovery method you’d like to use and we’ll get started!
Select your title recovery method:
Order Vermont Title LoopholeOrder Deceased Owner Title TransferOrder Bonded Title ProcessOrder Abandoned Vehicle ProcessOrder Prior Owner ContactOrder Lien Release Request Letter
How does a dealership’s floor plan impact auto sales and consumers? Let’s start by defining what a floor plan is. It’s a specific type of credit that dealerships use to finance their inventory. Most dealerships have floor plan financing in place for their car lot. For instance, if you pass by a new or used car dealership and see a hundred or even fifty cars parked outside with an average price of $20,000 to $30,000 each, you’re looking at millions of dollars worth of inventory just sitting there. However, most dealerships don’t have millions of dollars in cash on hand to purchase inventory outright. Instead, they obtain a credit line, similar to a large credit card, that they use to buy vehicles.
Here’s how it works: when they attend auctions to buy inventory, which is where most dealerships get their cars, the auction is connected to their floor plan. When they buy a car for, let’s say, $25,000, they simply sign for it, and it goes on their line of credit. The line of credit then sends a wire transfer for that $25,000 to the auction. The dealership then takes the car back to their lot, fixes it up, cleans it, and puts it up for sale.
When a dealership sells a car, they must first pay off a portion of the line of credit by doing a buydown for the first amount of the sale; usually, the price paid for the car, such as $25,000. The remaining profit, which could include additional fees for things like shipping or auction fees, is kept by the dealership. However, if the dealership is experiencing financial difficulties and needs cash, they may be tempted to delay paying off their line of credit by using the cash received from a car sale. This delay could prevent the dealership from obtaining the car title, which is held by the floor plan lender until the loan is paid off. As a result, the dealership will be unable to transfer the title, register the vehicle, or issue a license plate to the customer, leaving them in limbo. Ultimately, this delay could negatively impact the consumer’s experience.
Let’s assume that a dealership buys a $25,000 car using a loan that incurs interest payments. A few years ago, the interest rates were low, only 1% or 2%, and it might have cost a couple of hundred dollars per month to keep that car on the lot. However, with the current spike in interest rates, it could cost around $400 or $600 per month, adding up to an additional $2,000 of expense after three months on the lot. With the original $25,000 principal amount, the total tied up in the car is now $27,000. Suppose the market drops and a customer offers to buy the car for $23,000, which is less than what the dealership invested. In this case, the dealership will need to pay off the $25,000 loan plus the additional $2,000 in interest, totaling $27,000, despite only receiving $23,000 for the sale. This means that the dealership will be out of pocket by $4,000 if they sell the car under these circumstances.
If a dealership is experiencing financial difficulties, they may not be able to come up with the money to pay off the loan, which means they are better off keeping the car. However, keeping the car does not solve the problem, as its value will continue to decrease every month, adding up to more interest. This situation can negatively impact consumers, who may wonder why cars are not being sold at used or new car dealerships. They may assume that the dealership is aware of the car’s true value and wonder why they don’t just sell it at a lower price. However, the reality is that the dealership may not have the cash to pay off the loan and may have negative equity in the car, meaning they owe more than the car is worth. This situation is particularly challenging for used car dealerships with thin capitalization, as they may not have the funds to cover the difference. Even on a $25,000 car, the loss could be as much as $2,000 to $3,000, but on higher-end dealerships that sell luxury or high-end cars priced at $40,000 or $50,000, negative equity could be as high as $8,000 to $9,000. In such cases, the dealer may get stuck with the car, which can ultimately affect consumers in a variety of ways.
When you buy a car from a dealership, there are potential consequences that could affect you, such as delayed receipt of the title or paying the wrong price for the car. Additionally, if you trade in a vehicle that still has a loan, you’re relying on the dealership to pay off the loan, as per the agreement. However, if the dealership is experiencing financial difficulties and can’t cover expenses like payroll, they might not pay off your loan right away. We’ve seen cases where dealerships made car payments for customers who traded in their cars but didn’t pay off the loan immediately. If the dealership doesn’t make the payments, it could result in late fees and a delinquent record. In the worst-case scenario, the dealership goes out of business, and you’re left with the debt. The problem with dealership floor plans is not only affecting car dealerships, but it is also having an impact on consumers. Some cars are sitting at the auction for weeks, causing the book value to drop. The dealerships may be stuck with these cars and unable to sell them without coming out of pocket thousands of dollars, which they may not have due to the market turning against them.
There is a tactic that some car dealers have been using for a long time, which we observed as far back as 30 to 40 years ago. Recently, it has been featured in the news quite frequently. This tactic is referred to as a bailment agreement, although some people call it yo-yo, be back, or come back. Essentially, it is a way for dealers to engage in underhanded activities that could jeopardize your purchase.
Here’s how it works: When you purchase a car and drive off the lot, the dealer may have the option to call you back and coerce or blackmail you into giving them more money. Even though you’ve already bought the car, they can make you return with more cash, raise your car payments, or even exchange it for a different vehicle. This may seem implausible since you have already driven off with the car, but it is a common practice that can occur without you even realizing it.
We are bringing this up now because Jalopnik recently published an informative article on the topic, and even high-profile YouTuber and attorney Steve Lehto discusses it as one of the dealers’ worst tactics under fire. In fact, his first video on his channel was about this tactic many years ago. While it was out of favor for a while, it is now being used more frequently.
When you purchase a car from a dealership, you are required to sign various documents, such as a buyer’s order, a bill of sale, an odometer statement, and a car loan if you have one. Once you sign all the paperwork, you are allowed to leave the dealership with the car.
Dealerships often use a financing strategy called “spot delivery” or “on-the-spot delivery.” This means that they want to get you in the car and out the door as quickly as possible. They do not want you to go home and consider the purchase because you may change your mind. Therefore, they aim to complete the entire transaction on the spot.
To achieve this, they will take your financing application and submit it to one or more lenders. They will try to find a lender that offers the most advantageous financing for you, but they may also consider the lender that offers the best commission or kickback for them. However, not everyone is approved for financing.
If you are not approved for financing after you leave the dealership with the car, you are required to return the vehicle. This is a legitimate practice to protect the dealership’s interests.
One of the documents that you sign when buying a car from a dealership is a bailment agreement. This agreement stipulates that if your financing is not approved, you must return the car immediately upon request, and the dealership will refund your money and trading back, effectively undoing the transaction. While this is a legitimate and fair practice, it is worth considering whether you should sign such an agreement.
When you apply for financing, the dealership sends your application to various lenders. They assess your credit score, income, and other factors to determine the best financing option for you. However, there is always a possibility that the lender may not approve the financing as expected. For instance, they may approve you for a higher rate or a lower amount of money than what the dealership anticipated.
In such cases, the dealership may ask you to return to the dealership and put more money down or sign up for a higher payment. This may not seem fair, but the bailment agreement that you signed allows them to do so. In some cases, you may have to return the car or switch to a lower-priced vehicle if you are not approved for financing.
Dealerships include bailment agreements in every spot delivery deal. However, there are ways to avoid this.
To avoid signing a bailment agreement, wait until the dealership secures financing before taking possession of the car. If you are in the dealership and they negotiate the terms and financing, do not agree to anything until they have the financing approved and structured as they have proposed.
Instead, ask them to contact you once the financing is ready. It usually takes no more than a day or two. You may leave a deposit to hold the car if you wish, but this poses little risk.
Even if you do not anticipate being declined or rejected for financing, waiting is still a good idea. The dealership may put you in a low-rate financing or monthly payment tier, which may not come through as expected. If they made an error in their financing calculations, they have the leverage to bring you back in and fix the mistake, which could result in more costs for you.
An example of this, we worked with a client who went to a dealership to buy a car late at night, and they negotiated a great deal on a leased vehicle. The dealership factored in the car price and incentives from the factory, such as rebates, which were prevalent in 2017 or 2018. They also included incentives on the lease, which resulted in a lower rate and overall payment, making it an excellent deal.
The dealership delivered the car on the spot, but the customer refused to sign a bailment agreement, stating they did not want to take the car until the financing was approved. They wanted to ensure it was a done deal before committing. Therefore, they asked the dealership to call them the next day when the financing was finalized.
The dealership called back the following day and informed the customer that the deal might not be the same as what was initially proposed. The customer rejected the new offer and said they would look elsewhere for a car. Eventually, the dealership agreed to honor the original deal, and the customer returned to complete the transaction.
The customer in this scenario had good credit, so their financing approval was not an issue. However, the dealership made an error in calculating the lease deal incentive and the rebate incentive. They combined both incentives, which was not allowed. If they had completed a spot delivery, they could have called the customer back and demanded a higher payment. Since the customer did not take the car, they had more leverage to negotiate.
If the customer had taken possession of the car and enjoyed driving it, they would have been less likely to return to the dealership to redo the paperwork. Therefore, not accepting the car gave the customer more bargaining power. The dealership had to sell the car for a lower price, which may have resulted in a loss.
The dealership often includes a bailment agreement in the paperwork when you buy a car. This agreement requires you to bring the car back if they cannot secure financing for you. Do not accept this arrangement. Instead, tell them to call you once the financing is approved, and you are sure the deal will go through. You do not want to speculate with the dealership or commit to a deal that they can undo, leaving you without the same option.
It is unfair for the dealership to have the power to undo a deal while you do not. You want a level playing field. If they cannot commit to the deal, do not lock yourself into it either. Unless they are willing to give you the same option, do not sign the bailment agreement.
This issue has been recently highlighted in articles by Jalopnik, Steve Lehto, and Car and Driver. Dealerships are starting to include this tactic again in their playbook, which was popular in the 80s and 90s. To avoid any problems, do not accept the bailment agreement, as plenty of cars are available, and you can always find a dealer who will make the same deal for you.
Tell us about your vehicle and we'll direct you to a title recovery method that matches your scenario.
"*" indicates required fields
