a woman performing vehicle title process and registration
ComplianceFinance1월 03, 2023

Vehicle title and registration: Improving the process for you and your borrowers

Approving a borrower for a vehicle loan isn’t the end of the process of updating vehicle registration. 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 secured interest, the new owner must register the vehicle with the appropriate department of motor vehicles in their state.

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. Knowing that many car buyers find the purchase and registration process overly complicated, the advantageous thing to do is to help them complete the task with as little confusion as possible. This increases the chance of lien perfection and gives 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.

What is the process of transferring a motor vehicle title?

What is the process of vehicle registration? Whether a person is purchasing a new vehicle, or used vehicle, or transferring a title from one person to another, there needs to be a step where the individual goes to the state Department of Motor Vehicles or Secretary of State to register the vehicle in their name. The vehicle title process and requirements differ by state.

Why does the registration process need to happen quickly?

When a borrower fails to register the vehicle promptly, your lien is unperfected. An unperfected lien refers to the vehicle not being properly titled and registered with the lender’s name stated as lien holder. This can leave your financial institution liable for the vehicle and the loan—which leaves you at risk if a borrower then defaults.” Change the first sentence in the next paragraph to: “To ensure your borrowers are getting their vehicles registered, you should help them through the process by advising them where to go, what taxes and fees they’ll need to pay including potential late registration penalties, and what documents and forms they’ll need to register the vehicle.

To ensure that your borrowers are getting their vehicles registered, you should help them through the process by helping them learn what the time limit is to get the vehicle registered, what taxes and fees they need to pay, what their renewal requirements are, and what documents they need to register the vehicle. However, keeping up with the borrower to ensure they follow up on the registration process can quickly become cumbersome as the rules differ in each state. 

The better way: Working with vehicle title processing companies

Rather than trying to track down each borrower across states with different regulations, there’s a better way: working with a vehicle title processing company. These companies are experts in the jurisdictional requirements for each state and county and can help facilitate the process between you and your borrower. They can help you ensure that your liens are secured so you aren’t at risk in the case of a defaulted loan, and so that your borrowers are happy working with you the next time they need to take out a loan for a vehicle.

Lien Solution's Marina Hardy
Senior Marketing Manager
Marina Hardy is Senior Marketing Manager for Wolters Kluwer Lien Solutions. Her expertise is in program management, solutions marketing, product management, operations, customer experience, market research, and analytics.
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