Vehicle Title and Registration: Improving the Process for You and Your Borrowers
Once you approve a borrower and they finalize their purchase, it’s in your best interest to perfect your lien on the vehicle. All states require a motor vehicle’s certificate of title to note your lien for you to become a secured creditor. But for the title to include your interest, the new owner must register the vehicle with the appropriate department of motor vehicles in their state.
The new owner must complete the motor vehicle registration process to perfect the lien and mitigate your risk, which puts you in the tough position of motivating them to complete certain steps.
Relying on the borrower to register the car or truck means there’s a chance they’ll put it off or fail to register it at all. An unregistered vehicle leaves you with an unperfected lien, which makes you an unsecured creditor — exposing you to risk down the road if you have to pursue payment on the asset. The consumer would pay secured creditors before you, reducing the likelihood of them being able to pay back your loan.
Knowing that many car buyers find the purchase and registration process overly complicated, the advantageous thing to do is help them complete the task with as little confusion as possible. This serves to increase the chance of perfection and give the customer a good experience. Without creating that positive experience from beginning to end, you might have a perfected lien, but you’ve lost a referral and potential repeat customer.
Encouraging timely vehicle registration
The simplest way to make sure buyers register their vehicles is to put all the necessary information at their fingertips. They shouldn’t have to guess about which government department they need to register the car or truck with, the right forms to use, the time limit for registration, the amount of taxes and fees, possible late registration penalties, and renewal requirements.
How do you perfect a lien?
New owners want to know what to expect from the motor vehicle registration process. The less intimidating you make it, the more likely they are to complete it right away so you’ll have a perfected lien. Confused borrowers might put the registration process off too long — or permanently — giving you an unsecured lien.
However, the first hurdle isn’t making sure the buyer has a good understanding of the applicable vehicle registration requirements — it’s having a good grasp of the process involved in the perfection of a lien yourself, and the process differs from one jurisdiction to the next.
By knowing the vehicle title and registration requirements for each consumer’s state, you can provide both the information the borrower needs to complete their registration and excellent customer service.
Efficiently managing vehicle registrations across jurisdictions
Each state has its own rules, regulations and taxes that apply when owners register their vehicles. Staying informed of the myriad requirements allows you to pass that information on to borrowers.
As the lender, it benefits you to make sure buyers are fully informed about these issues, like the time limits and potential late fees in their state. But keeping track of each state’s procedures is cumbersome and time-consuming to do on your own.
Instead of taking on tasks outside of your primary products and services, you can partner with a third-party vendor that provides automated solutions for the motor vehicle title management process. Our Motor Vehicle Solutions offer a streamlined workflow for proper vehicle titling and lien filing across jurisdictions as well as accurate tax and fee estimates for borrowers.
To learn more, speak to one of our titling experts today by calling (800) 833-5778, x3.