The Expert Podcast

So what happens if you are a lender on vehicles and your dealer did not get the title listed you as a lean holder? This happens a lot with indirect lenders or direct lenders when you have a car dealership that's arranging loans on your behalf. As you know, the car dealership is supposed to take the title transfer the ownership to the buyer, the borrower, and list you as a lean holder. But what if they didn't? What if they transferred the property to the buyer but never put you as a lean holder? What if they never even transferred it to the buyer? That's called what's called a non-perfected lean or a lean not being perfected on a vehicle.

What that means is your lending position has a collateral that's defective, meaning that you might not be able to repossess the vehicle or if you do, you might not be able to sell it. How do you get that fixed? Well, if you still have access to the dealer, obviously you get them to fix it. If the dealer's out of business or if they're out of trust on their floor plan or there's some other problem, you may have to take some steps like a bonded title, a court order title, a civil lean. You'll see the link below give you more information if you are a lender. We work with a lot of lenders that have this problem.

You want to do an audit on your portfolio on a regular basis to make sure all your leans are perfected against title. If they're not, you want to take action as soon as you can to get that fixed. The sooner you do it, the better. If you drag it out longer, sometimes the borrowers can sell the car. Sometimes you may not have jurisdiction, you may not have claim. If the borrower stops making payments, you might not be able to repossess it. So getting that process started early is a good thing.

If you do need more information, you can reach us on our website. We even have title consultation about specific scenarios if you'd like to avail yourself of that. But make sure as a lender, you get your lean perfected on that vehicle as soon as possible and verify your portfolios to make sure that you're in title on the cars that you have a security interest in.