Hidden Crisis in the Automotive IndustryThere is a hidden crisis about ready to hit the automotive retailing industry and it’s related to the pandemic even though that’s been over for years. The reason is there will be fewer lease returns and fewer used cars for that matter. Remember back in 2021 and 2020 when dealerships were shut down for the pandemic, there weren’t as many cars sold or leased. Remember, used cars—the used car inventory doesn’t come from a used car factory; it comes from vehicles that were sold two or three years ago, now coming back into the marketplace.
Impact of 2021 Leases on 2024 MarketIf you had a three-year lease on a car, which is the most common lease term, in 2024, leases that are coming due were put out in 2021. In 2021, there were much lower volumes of vehicles sold or leased. So, if you’re a dealership, you normally would have a big off-lease pool of vehicles that you can draw from. In 2024, you’re not going to have that pool, which means used car inventory is going to be very difficult to come by. People who bought cars in 2021 didn’t lease them—they bought them. There were fewer cars sold that year, but also, those people may keep them longer than before.
Slim Used Car Market AheadSo, it’s likely that the late-model used car market is going to be very slim for the next 12 to 18 months. What is that going to mean for the industry? Automakers will have a challenging future, and leasing rates fell from 1 in 3 to 1 in 6—half the number. Certified pre-owned cars will see a reduction in supply because there’s less of them. What’s that going to do for prices? Well, prices might go up on used cars again, which might make it difficult if you’re in the used car market. It might also be a good time to look at a new car versus a used car.
Outlook on the Future of the Car MarketHow long is it going to last? Well, according to JD Power, one of the largest automotive consultants, the used vehicle supply won’t return to 2023 levels until the end of the decade—that’s five to six years away. So, if you’re looking at the car market this year, next year, or down the road, you might want to hang on to the used car you have if it’s a nice one, or consider a new car that might not be much different in price from the used car that might be in the marketplace.
Future Considerations for Car BuyersInterest rates are still going to be high, so if your vehicle inventory in your family is such that you may need to replace one or more of your vehicles, consider what the marketplace is going to be like in the next few years to make plans for which car to consider, which car to buy, or which car to keep.
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Montana LLC Loophole Scam Update Okay, here’s another update on the infamous Montana LLC loophole scam. As we talked about before, there’s a lot of enforcement action from the government regarding this evasion scheme. This is the latest, and we were referred to this by a conference call we had with some government agents and DMV employees. We’re a member of a coalition called EART (Electronic Automobile Record Transfer), which is a coalition of vendors, companies, and DMVs trying to implement electronic titles.
Government Crackdown on the Loophole In one of the conference calls, somebody brought up the Montana loophole, and they said their state is actively enforcing against it. They also mentioned an article showing that California is doing the same thing. The person who mentioned it wasn’t from California but from another state, which I won’t mention. This Montana LLC scam involves individuals with a title problem or those trying to avoid paying sales tax, skipping inspections, or circumventing regulations. They form an LLC in Montana, put the car in the company’s name, get a license plate, and drive around with it. Montana has low requirements for inspections, no sales tax, and easy title processes.
Legal Ramifications and Increased Scrutiny Many people trying to streamline their titling process, lower costs, and reduce paperwork use this loophole. However, in many cases, it’s completely illegal, and other states are catching up on this—just like they did with the Vermont loophole, which was not technically illegal but an improper out-of-state registration. This article highlighted that states are cracking down on this directly with consumers. Trevor, a California resident, was surprised when state investigators and deputies arrived with a search warrant to seize his car and phone. The crackdown comes from states realizing they’re losing sales tax and that improperly registered cars are on their roads without the correct inspections.
Methods for Tracking Loophole Violators States are discovering these cases through three main methods:
Insurance and Title Complications The insurance issue creates a catch-22. If you tell your insurance company the car is in Montana but it’s in California, they’ll deny coverage if there’s an accident. On the other hand, if you tell them it’s in California, they’ll ask why the car is titled in Montana. Either way, this puts you at risk of losing your insurance or facing penalties. All 50 states, including territories like Guam and Puerto Rico, have this issue on their radar. They are using ALPRs, AI monitoring, and local police to run background checks on suspicious registrations and titles.
Legal Consequences and Caution This is a serious nationwide issue, with people facing tax evasion charges, penalties, and even prison time. Authorities are cracking down on LLC-owned vehicles from Montana that are operating in other states. If pulled over, drivers could face questions about their licenses, insurance, and the LLC’s purpose. These loopholes can lead to severe consequences, including imprisonment.
Awareness If you’re using this loophole to avoid taxes, inspections, or paperwork, there are legitimate ways to handle titling issues without risking penalties. We’re not giving legal advice, so before attempting anything, consult an attorney to understand potential risks. Cases of arrests and prosecutions related to this scam go back five or six years, so ignorance of the law won’t be a defense.
Hello, this is Dave Pelligrinelli at Car Titles. Lately, we’ve been getting more requests for lien releases on vehicles from a lender called Yendo, and this is a very innovative type of lending institution. What they do is they provide you with a line of credit, like a credit card, that is tied to your vehicle.
How Yendo Lending WorksSo what they do is they get the title for your car, they hold on to it, and they give you a credit card that you can use to borrow against or pay down. It’s not any kind of fixed amount—it’s a very innovative lending business model. But what you want to make sure of is, whenever you close that account or pay it to zero, that you get a lien release from the lien holder. That way, if you ever need to sell your car or trade it in, you actually have a lien release.
Customer Experiences with YendoThe last couple of inquiries we received were from people who had a loan with Yendo. They had a credit card, and they had just recently paid it to zero but hadn’t canceled the card yet, and their car was totaled. So, they had to get a title so they could get their insurance money. Remember, as long as that card is still active, they’re going to hold a lien on that vehicle because you could charge it up any day.
Importance of Lien ReleaseYou want to make sure you get a lien release document. If you need assistance on how to do that, you can check out our website. If you want assistance with the paperwork, we can handle that as well.
Yendo’s Unique Lending ModelThis Yendo credit lending on vehicles is an interesting new twist on vehicle loans, and I’m wondering if anybody here in the comments has experience with it. Did it work out for you? What has your experience been dealing with that company? So far, we’ve had really good luck dealing with them to get lien releases. As long as there’s no type of conflict with the company, they’re very good at providing the documentation.
Yendo’s Customer RelationsIn some cases, even when there’s a delinquency or a charge-off, they have provided a lien release because it’s a charge-off. But in most cases, they will deal with you very straightforwardly as a lender. They’re very well-known, and if you look at the bottom, they’ve been featured in all kinds of media and publications for their unique and novel approach to lending on vehicles.
Calls Regarding Vehicle Title ServicesWe get a lot of calls in our vehicle title division about filling out forms and doing paperwork. We have a service for doing paperwork, and a lot of people think that the hardest part is filling out the paperwork.
The Hardest Part: Finding the Right PaperworkThat’s not always the hardest part. The hardest part is actually sometimes locating the right paperwork and determining which paperwork to use. Sometimes it’s filing and figuring out how to fill it in properly, but it’s more than just a fill-in-the-blanks type scenario.
Importance of the Process Beyond Filling Out FormsA lot of our clients that buy title services from us appreciate more the fact that we found the paperwork, located it, figured out the process to use, and then filled it in, more than just filling it in. Look, if it was just a matter of filling in the paperwork, no one would really need to pay any money because you can do that yourself.
Printing and Processing: Key to Successful PaperworkBut first, you have to get the paperwork, then you have to print it out, then you have to figure out what order to do the steps in. So when it comes to doing any kind of government process, locating the right process, locating the right forms, and figuring out how to proceed with it is as important as just filling in the blanks.
The Complexity of the Government ProcessIf it was just filling in the blanks, color by numbers, then anybody could do it. But a lot of times, people don’t know what the process is, don’t know how to proceed with it, and don’t know where to get the form.
Digitized Car TitlesWe’ve covered this in some other videos before, but our membership and participation in eart, which is a coalition of major companies trying to get car titles to be digitized, along with companies like DocuSign, CarMax, and Carvana, is starting to pay off. Look at this news story—California DMV has put 42 million car titles on the blockchain. They’ve digitized vehicle titles. This is a great development and all part of the push to make vehicle titling more modern, where you don’t have to worry about paperwork, documents, and signing forms.
California Leads the WayThis is huge progress, and California, being the largest state in population, will lead the rest of the country. So, what does this mean for people with titles? By digitizing 42 million titles using blockchain technology, first of all, it’s going to prevent fraud. Most importantly, it will smooth the car title process, so it’s not going to be quite as bureaucratic. It’s not going to be quite as much of a nightmare to deal with the DMV.
The Convenience of Digital TitlesYou’ll be able to get vehicle titles through a mobile app. Think about that—think about what you have to go through now to get a vehicle title. How much paperwork, hassle, and runaround do you have to deal with? How great would it be just to do it with an app?
Lean Releases and TransparencyThe other part is going to be lean releases. First of all, it’ll block lean fraud, but it’ll also provide a transparent record of property ownership. When you pay off your car or pay off your lean, you won’t have to go chasing that lean holder to release your lean because it’ll be something you download on your phone. Your lean release is already right there.
Timeline and Opt-Out OptionIt may take a little bit of time. They say that you’ll be able to access your digital car title starting early next year, so less than 12 months. It’ll also be something that you can opt out of. If you don’t want to have your title on your phone, you can still go paper if you want to.
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