The Expert Podcast

…So let's say you purchase a vehicle from a car dealer maybe an online dealer or maybe one with a car lot. And you finance it but you don't finance it through the dealership Maybe you finance it through your credit union Maybe you finance it through another bank. And what happens if the dealer doesn't come through with a title, what happens if the dealer maybe doesn't have a title maybe they bought it. from an auction and they never got the title There's a lot of reasons why a dealer might not have a title they're not supposed to sell the car until they have the title in their possession but a lot of times dealers will sell it because they want to make a profit right away… So they don't come up with the title and you're stuck. Does your financing still remain valid?

Well here's what happens when you got that financing from your bank or your credit union? That bank or credit union gave the dealer… The car price in cash If you bought a $25,000 car. and you financed it with that. Credit union maybe your payments are four 50 a month. Let's say. The bank doesn't pay the dealer over time The bank writes him a check like you're paying cash for the car The dealership always gets paid cash for the car. So now your bank is out 25,000… You owe them four 50 a month They don't care what the money's for It was for a car loan. But as far as they're concerned, they put out money They're expecting to get their payments back. If you never get a title, the bank is not going to be. Take the loss. In fact, if the bank doesn't get the title right away cause normally with a car loan the bank holds the title.

If the bank doesn't get the title right away, they might convert your auto loan into a personal loan If you read. The fine print of your loan contract It says if they don't get the title within a certain amount of time 60 days 90 days whatever it is. They have the right to convert your auto loan into a personal loan. And how does that. affect you Well, they could raise the rate because an auto loan is more secure loan less risky because they have collateral They could repossess your car. So your auto loan rate might be let's say 7%. If they don't get a title they can say look this is now a personal loan We're jacking up your rate to 12% So now your payment instead of four 50 is five 10 or whatever. So. The dealer not giving a title… could have liability for you and the bank And nobody's going to take the liability on your behalf Right? So you want to make sure that dealer has a title

What should you do to protect yourself Well if you're buying a vehicle from a dealer and financing it… You should have the dealer at least show you the title the old title won't have their name on don't have somebody else's name on it because they bought it from an auction or bought it from another dealer That's fine. But just make sure they show you the actual original title not a photocopy. Not a digital copy not something online that they can show you the original certificate. They don't have to give it to you because you're not going to be able to take it with right away. But at least show you they have it in house in their possession because if they don't. That puts you at risk of paying money for something that you can't do anything with

We have a lots of examples People call us all the time where they bought a car. Six months eight months a year ago, and they don't have a title yet and they can't even drive their car. Because the registration's not valid Their temporary paper plates have expired. And they're getting pulled over all the time so they have to park their car and they either paid cash out of pocket or they're paying high payments for. So make sure you verify that your dealer. Is in possession of a title before you either sign on the dotted line or hand over your hard earned cash…