Clearing the Way for Trades
Q: How can we speed up the process to obtain clear titles on trades?
A: In most states, a dealership cannot sell a vehicle it does not own. In other words, a dealership cannot sell a vehicle without a clear title. While some inventories are floored (financed) on a wholesale basis, the dealership retains the right to sell the vehicle and must pay the flooring amount to the lender the following day.
Back to Basics
When the customer has a trade vehicle with a lien, some basic steps must take place:
1) Obtain a current copy of the vehicle registration.
2) Verify the lien holder’s information.
3) Telephone the lender to obtain the correct address for sending the payoff monies.
4) Verify the collateral; some lenders cross collateralize loans.
5) Make sure the lender provides a ten day payoff quote.
6) Document whom you speak to, the telephone number, and the account number.
7) Document when you send the file to the accounting office, making sure accounting has enough time to get the check out so that the lender can process it before the payoff amount changes.
8) Verify that the lender receives the payoff funds.
9) Ask WHEN and HOW the title will be sent to the dealership.
Although the list may seem cumbersome, the steps happen quickly. The point is to track, verify, and follow through.
Getting to Go
It is an F&I responsibility to track titles. The clear title is part of the deal down payment, and as incoming inventory, the F&I manager is the “Go To” person to verify when a trade is available to sell. Titles in transit can hold a dealer’s inventory hostage and create a drain on cash flow. When tracking down titles, time is of the essence. Pay attention to details and follow through.
If an out-of-state title is lost, go online to the appropriate state department of motor vehicles and download the forms required to obtain a duplicate title. The Web has made forms easy to obtain; it is the correct customer signatures that present the greatest challenge.
Be aware of double transfers. This situation occurs when Person (A) gives an old vehicle to Person (B) to use as a down payment on a new purchase. Person (B) takes the vehicle to the dealership with a signed title and maybe the registration in the name of person (A). A Bill of Sale, Odometer Statement, and Power of Attorney from Person (A) to Person (B) are all required in order to complete the transaction that transfers the trade title from Person (B) to the dealership.
Titles are a vehicle’s ownership trail. Although your state department of motor vehicles “holds” the title, you and your dealership must document the trail.
RV Executive Today, October 2005. p. 24