The Expert Podcast

…So what happens when your dealer goes out of business Well there's two potential problems with a dealer going out of business It could be their title. It also could be your lien release. So let's first talk about a dealer going out of business And this comes up from some new stories happening with the retailer called Carvana Now Carvana is running into some serious financial problems They were reported there. fourth quarter of 2022, where they lost $1 billion in losses just in a quarter of 2022 that doesn't bode well. for their future Now who knows? They may make it out of this They may re restructure and they may survive However, If you were an automotive retailer and you lose a billion dollars in your stock price lost 90% you might have some problems. What do you gotta watch out for if you purchase a vehicle from Carvana or any dealership that might be in distress or have some risk of losing their dealer's license or going out of business, what happens if you haven't received your title yet?

Well what could happen is that. You never get your title, right You give me your money or you finance a vehicle and you didn't get a title. Well now you're stuck If that dealer is out of business.You could have a difficult time getting ownership now. Most states have licensing laws where they have to post bonds and maybe they can help you get a title but it's going to be a big mess. So what we recommend doing is if you're buying a car from any dealer… Even if it's a franchise new car dealer if it's a used car, right. We used car we're talking about not new car new used car… See if they can show you a copy of the title before you give them the money. Right. If they have the title that they can show you, then you're probably going to be in good shape The problem is a lot of these dealers are selling vehicles. That are on floor plan. Meaning that they have a line of credit. From an auction from a bank from a finance company that…when they buy the vehicles they don't pay cash. They put it on their credit line It's like a big credit card. And when they sell the vehicle they pay off that loan. A lot of times the bank or the option holds the title So if they don't pay off the loan right away, When they get your money they don't get the title and they can't put the title in your name And sometimes the title can get lost It can get damaged. A lot of things can happen.

So what we recommend doing is if you're going to buy a car from a dealer especially especially one that has some… maybe risk of not being around in the future. Seeing if they can show you the title they don't have to give it to you and they can cover up the name of the owner if they want whatever they want to do. But if they have the title in their hands, That gives you a lot more peace of mind. That you're not going to be stuck without a title. So what do you do if you've purchased a vehicle already? And you're having title problems don't waste any time right away Start sending notices to the dealer to the D. to the titling authority, to their licensed authority to make sure you're not going to get lost in the shuffle squeaky wheel gets the worm. In fact if that dealer has titles that they have to pay off the floor plan on because they're short on cash. If you're the one that's banging on their door emailing them calling them sending them letters. They'll probably pay yours off first. So you want to be at the front of the line. You don't want to be. The person is not saying anything that has their title process last because your registration might run out Your temp tag might expire and now you get pulled over Your car gets towed. and you're out of luck. A lot of these dealers And again we're not picking that Carvana right Who knows they may survive and they're not necessarily a bad place or who knows. but any dealer that's running into financial problems. Could have some. Title risk for buyers And you don't want to be that person that pays good money or, or owes money to a bank and you don't get a title.

So watch out for title problems, really with any dealer. Right It's It can happen anywhere. If a dealer buys a car and loses that title before they put it in your name. It could be the same thing and you could be hanging out there for a long time. we do a lot of titles for auctions and dealers, where the dealer bought a car from the auction… Had their briefcase in their car and the briefcase got lost got stolen All the titles are gone. It's a difficult task to get that back The dealer can not apply for duplicate title, contrary to popular belief. So make sure that if you're buying a used car, Protect yourself from title problems Look at our next video We're going to talk about lien releases and a major major lender buy here pay here went out of business and what that's going to mean for their borrowers..