The Expert Podcast

Okay, here's a title nightmare waiting to happen. Big-time article today in Fortune Magazine, one of the largest financial publications, about a subprime auto lender going out of business, right? And we get hundreds of calls every day from people who bought a car from a dealer, and they went out of business before they got their title after they paid it off. Meaning that they did a buy-here-pay-here with this dealer. So, they paid payments directly to the dealer, one year, two years, whatever it is. At the end of that period of time, the dealer had gone out of business, and they never got their title because you don't get your title until you make your last payment. So if that dealer goes out of business within that period of time, you're out of luck, and it's a very serious problem to get a title. You can see the link below for some methods to get your title if you've been a victim of a dealer going out of business.

But what does it mean for this particular dealer, and how big of a problem is it? Well, this dealer is called American Car Center, and they closed their doors. They had a $222 million bond sale that they just pulled. They were trying to get some money. They had 288 people that worked for them at their headquarters, and they had 40 dealerships across 10 states. So, what does that mean? Well, if each dealership, let's say, sells, I don't know, what is the dealership going to sell? 30, 40 cars a month, maybe more? But let's say 40 cars a month. That means every month, they're putting like 1,600 cars on the street over all their dealerships. There's probably more than that, right? But let's just call it 1,600 cars every month. That’s like 20,000 cars that they’re putting on the street without giving titles because they hold the title until it’s paid off. So even if their loans are only for a year long, that’s 20,000 people who are at risk of not getting a title. 20,000 people. And if their loans are two years, or if they sell 50 cars a month, you could be talking 30, 40, 50,000. There's a possibility there could be a hundred thousand cars out there with title problems.

So, what happens? So, you buy a car from this dealer, you pay payments for six or eight months, and then they go out of business. Now, how do you get your title? Right? Presumably, there may be a company that comes in and buys up their assets or takes over their operations or whatever it is, or they go bankrupt. But in the meantime, your title is now at risk. Right? So what you want to do is if you are a customer of this dealer or any dealer for that matter, that goes out of business while you're making payments to them, right away, you want to get good legal advice. This may be something you contact an attorney about or at least make a filing with the licensing board. How do you go about getting a title? Well, what you need to do is you need to file for a court order title or a magistrate title, sometimes called a civil lien, right? It may eliminate you having to make the rest of your payments too, but what you want to do is start that process early because in some cases, the titling division of your state has a victim's restitution fund that this dealer’s been paying into for years. Once that fund is exhausted, maybe it’s not going to be as easy to get a title. You want to be at the front of the line. So, if you are a customer of this dealership or any dealership that has gone out of business, the first thing you do is file for a magistrate title, or a civil lien title, or a court order title. Every state, and even counties, call it different things.

But this is huge news. This could mean tens of thousands of vehicles out there with title problems, with lien release problems, because there’s really nobody around anymore that can issue these titles and sign off on lien releases because they’re going out of business. You know, they said right here, you know, they laid off 288 people. All employees will be terminated by the end of the business day, so it’s not like they’re going to be around to finish up on paperwork or to get people their titles. All employees are gone that same day. It was very sudden, so it’s not like they’re going to have a staff that says, "Hey, let’s wind it up. Let’s get these people their titles." They’re done. The office is closed. That’s going to be a problem.

So anybody who has this type of scenario, you want to start right away with getting the process going to make sure that you don’t lose out on your vehicle, and all that money you spend on payments is down the drain.