How to Make Motor Vehicle Title Management a Smooth Process
You’re not alone in asking, “Is there a better, less complex and faster route?”
In the first of this series on the motor vehicle titling process, we’ll look at the difficulties borrowers can encounter at the DMV and how that can negatively impact your business, your motor vehicle title management and the perfection of your liens. In later articles, we’ll talk about the challenges of electronic versus paper titles, the ugly specter of brandwashing, and how a “do-it-yourself” program may not be in your best interests as a lender.
Today’s consumer has their pick from among nearly every type of car or truck imaginable. From tiny to large, from moped to a speed boat, from utilitarian to frivolous, and from economy to luxury, your borrowers have a near endless variety of types, brands and price points from which to choose. Your job, of course, is to make sure your customer not only qualifies for a loan for the motor vehicle they select, but can repay the debt in a timely fashion. Once approved and the sale made, this starts the motor vehicle titling and registration process
Difficulties in the titling process
The first variable encountered is that the borrower – the person least knowledgeable about the titling process – is the one responsible for registering the vehicle. Borrowers often don’t complete the process quickly, if they even finish it at all. Perhaps they figure now that they have the keys, that’s really all that’s important. Who really can blame them? Or, if the borrower does follow through and finish the vehicle titling and registration, it’s can be done incorrectly and need to be corrected.
How does that impact you?
That leaves you, the lien holder, stuck in a bad spot. It means your lien is unperfected. That exposes you to greater risk down the road and causes red flags to start flying in audits. It may also cause problems between you and your customer. The borrower may drive away with ill feelings after a bumpy trip to the DMV. If they are unfamiliar with the requirements, taxes and fees (and they probably are unfamiliar), they may blame you for their bad experience, jeopardizing future business from them or someone they know.
This is a good reason to educate your borrowers beforehand. Let them know upfront they will likely need to complete many different tasks at the DMV, including:
- pay taxes on the vehicle
- pay other fees associated with the registration of that type of vehicle
- change owner name
- transfer a vehicle from one state to another
- keep up with vehicle registration renewals
However, what if you, the lender, are not sure of all the requirements, taxes and fees? Lots of motor vehicle lenders do business in many different titling jurisdictions. The registration, titling requirements, taxes and fees can – and almost always do – differ from one jurisdiction to another.
Local jurisidictions have different laws
For example, in Michigan, vehicle owners have 15 days after purchase to apply for vehicle registration without penalty. However, they have only 10 days to do so in California. Failure to timely register a motor vehicle after purchase there can subject an owner to three types of late fees that add to the expense. Lenders who do business in both of these states need to know this and advise borrowers in each state accordingly.
How can you, the lender, be sure of the proper advice to give to ensure the borrower completes the process correctly the first time, this perfecting your lien? How can you keep track of a dizzying array of registration and titling requirements, taxes and fees spanning all the jurisdictions in which you do business? The good news is that there are third-party vendors with electronic, automated solutions that can help the lien holder optimize this part of the motor vehicle management process.
The solutions enable users to know in advance the requirements, procedures, taxes and fees of any jurisdiction under which they conduct transactions. This not only makes a formerly frustrating process much smoother and error-free, it also mitigates the risks associated with operating across multiple jurisdictions. In the end, a lender gets a more efficient workflow and its customers get a much more pleasant auto titling experience.