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The Vermont Title Loophole Explained

Have you heard of the famous Vermont title loophole? The Vermont title loophole, also known as the Vermont registration process, is a method for non-residents to obtain a title for a vehicle that is 15 years old or older using a bill of sale as proof of ownership. Vermont residents are able to use this method as well, but Vermont is the only state to allow non-residents to apply for a title in their state.

How does the Vermont title loophole work?

Vermont is a non-titling jurisdiction, meaning that the state of Vermont does not produce titles for vehicles 15 years old or older. This means that vehicles 15 years old or older are only eligible to receive a registration, which in the state of Vermont would be the equivalent to a vehicle title. In most US states, you cannot apply for a title without having the old title signed over to you. If you’re unable to find the prior owner or they’ve lost the title, this could pose problems in your application process in your state. By using the Vermont title loophole, a vehicle owner can apply for registration in Vermont and if approved, use that registration document as proof of ownership, aka a vehicle title, and transfer it to a title in your state. 

What is required for the Vermont title loophole?

Vermont Registration Tax & Title Application (VD-119)

According to the Vermont DMV, one of the biggest mistakes that applicants make when applying is selecting “New Title” rather than “New Registration” in section 4 of the VD-119 form. Remember, Vermont is a non-titling jurisdiction for vehicles 15 years or older. In these situations, the registration is the equivalent to a title for that age of vehicle. We recommend that this form is typed and double-checked for accuracy and completeness before submitting it to the Vermont DMV. Applications that are typed and complete are more likely to be approved and processed quicker than handwritten applications. 

Verification of VIN or HIN (VT-010)

A VIN verification is a process where an authorized agent physically inspects the vehicle’s VIN to confirm that the VIN on the vehicle matches the VIN on the application. If your vehicle is a motorcycle, a VIN verification is always required. Due to COVID, some cars, trucks, and other non-motorcycle vehicles have been able to apply without the extra VIN verification. However, in 2022 this is changing and the Vermont DMV will soon require this as a step for all applicants. A VIN verification can be conducted by an authorized state agency such as state police, a DMV investigator, or another authorized agency. For non-motorcycle applications, we recommend that you include a VIN verification if you are able to do so. Motorcycle applications will always require a VIN verification.

NADA value & book value

The book value of your vehicle is about how much your vehicle is worth in the market today. There are different values such as average value, clean trade-in, and so on. When using the Vermont title loophole, look for your vehicle’s clean trade-in value. The Vermont DMV first recommends using the NADA book value first in their statutes, but not all vehicles will be featured in this book. If your vehicle is not in the NADA book, there are some other comparable places you can find the book value such as Kelly Blue Book and Galves. Make sure that the book you are using is approved by the Vermont DMV and that the value you assign to your vehicle is correct. Always choose the lowest possible value for your vehicle because the higher the value, the more you will pay in taxes. If you can, attach a copy of the book value to your application. If the value is too low, the Vermont DMV will send you an invoice for the remaining balance. If it’s too high, they may simply agree with the value or may send you a refund depending on the difference in figures.

Sales tax

The amount of sales tax owed is often a sore subject. The amount of sales tax owed on most vehicles is calculated using the clean trade-in book value of your vehicle multiplied by 6%. This might not sound like a high percentage, but depending on your vehicle’s value, the amount owed in taxes may be higher or lower than anticipated. For trucks over 10,100 lbs and for certain vehicles, the taxes are capped at $2,075.  There’s not a way to get around paying taxes. Vermont statutes state that by simply applying for a registration, that is evidence that you owe them taxes.

Registration fees

The Vermont registration fees are $48 for motorcycles and $76 for most vehicles and trucks under 6,000lbs. Heavier vehicles and some other types of vehicles may be subject to a higher registration fee that can be found here.

The vehicle must be operable

To use the Vermont title loophole, you don’t have to ever take your vehicle physically to Vermont. However, this doesn’t mean that you can get a title for any vehicle or parts using this method. The vehicle must meet all of the qualifications of an operable on-road vehicle and cannot be in the NMVTIS database. The VIN verification process is used to assist this requirement as the verifier can check the VIN against the NMVTIS database upon inspection.

Liability insurance

The Vermont DMV doesn’t require proof of insurance, however, on the application, there is a section that certifies that at the time of application, you have current insurance for the vehicle. It is a crime and punishable by a $1,000 fine and up to two years in jail for providing a false statement on this application.

The Vermont title loophole is a great way for vehicle owners to get a title for an older vehicle and a bill of sale. Every state recognizes the Vermont registration as the equivalent to a certificate of title and should have no problem transferring the title to your state. We recommend that when applying to transfer the registration to a title in your state that you bring along the title informational bulletin to assist the DMV agent with the process if they are not familiar. Obtaining a vehicle title is an important step in keeping your assets safe. If it’s your car, you deserve a title with your name on it.

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