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So you’re probably thinking that if you buy a car from a licensed dealership, you’re in good shape and safe as far as the title is concerned. Well, not so fast. Here’s another example of where a dealership closed and went out of business, and this is no small dealership; it’s a large chain primarily out of Florida called Off Lease Only. Off Lease Only originally started out as purchasing lease buybacks and selling those to the public, but they branched out into other types of vehicles and filed for bankruptcy, suddenly firing all their employees and shutting down all their locations.
The Title Transfer ProcessHow does that work if a dealership goes out of business? How do the titles work for the cars that were recently sold? When you buy a car from a dealership, three things happen. First, they take the title they had for that vehicle and sign the back of it over to you. The title is then assigned to the buyer. The dealership takes that title along with the title application you signed and sends it to your local titling authority, usually the Department of Motor Vehicles.
Financial Implications of a Closed DealershipWell, first of all, they may not have had the title yet. Many dealerships sell vehicles quickly, sometimes even before the title is in their possession. If the dealership shuts down before processing the title with the Department of Motor Vehicles, it can impact the recent buyers. This situation becomes critical, especially for those who financed the vehicle, as the title needs to be sent to the lender.
Potential Title Delays and Financial RisksWhat happens after a few months when your bank doesn’t get the title? They may start pressuring you, possibly converting your loan to a personal loan or even calling for the loan to be repaid in full. The bottom line is that you need to ensure your title gets from the dealership to the lender. If you didn’t finance the vehicle, being the legal owner without the title in hand could be problematic if the dealership didn’t process the title or send it to the Department of Motor Vehicles.
Financial Challenges in BankruptcyWhat if, during bankruptcy, the dealership doesn’t have any more money? The money collected from you for tax, registration, and title fees may be frozen until the bankruptcy trustee releases it, which could take months. Meanwhile, you might be driving without a title, risking an expired registration and temporary tags.
Unpaid Vehicle ScenariosWorst-case scenario: What if they never paid for the vehicle? Many dealerships use floor plan lines of credit to purchase vehicles, and if they haven’t paid for the car yet, your car might be owned by the lender. Until they get paid, they won’t release the title, creating a complex situation.
What to Do if Your Dealership ClosesIf you’ve recently purchased a vehicle from a dealership that’s gone out of business or financed a vehicle from a closed dealership, start the process early. File against victims restitution funds and complain to the Licensing Board. Consider filing for a court-ordered title to establish ownership officially. Initiating these processes early can expedite the resolution, ensuring you get your title as soon as possible.
Cautionary Advice for Future BuyersBefore giving money to a dealership, even a legitimate one, make sure they show you the title. While they can’t give it to you before the purchase, ensuring they have it in their possession can mitigate the risk. Being proactive in verifying the title’s existence can prevent complications in your vehicle purchase decision.
Seek AssistanceIf you have any questions or need assistance, visit our website, car titles.com. We have a help desk email ([email protected]) ready to provide assistance. Be cautious and informed about your title and ensure a smooth vehicle purchase experience.
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