For generations, traditional vehicle titles were paper-based, and each state would have separate forms and requirements. This made it very difficult to manage, especially for lien holders. 

These days, there is a move towards electronic titling, which could simplify matters for dealerships, although there are still downsides to consider. 

Here's everything you need to know about the current state of play and the future of electronic titling. 

Electronic Titling Explained

Across the country, several states have adopted the process of electronic titling. The solution is mandatory for some and voluntary for others. However, some states do not have any form of electronic titling at all._[1]

With electronic titling, the system creates, files, and alters a vehicle title as needed, eliminating the need for physical paperwork. Within this system, it’s possible to register electronic liens. When someone creates a lien, the state DMV will send an electronic notification to the lien holder instead of a paper title certificate. It’s typically managed through a third-party service provider.

The state DMV will process any paperwork and issue electronic notifications rather than printing a paper title. They’ll send these records to the service provider, who will then relay them to any lien holder. The lien holder can log in to view or manage those records through the service provider.

When a dealer sells a car to a consumer who takes out a loan to do so, the electronic title will be held by the DMV. The lien holder can access the electronic version of the car title through the DMV. When the customer satisfies the loan, the lien holder files the paperwork with the DMV, and the customer can get a paper title if they wish.

When a customer purchases a car as part of a trade-in deal, the dealer will need to file the paperwork with the DMV in order to access the title (should it be an electronic title).

Electronic titles appear on a vehicle history report, with pertinent information about theft history, salvage, maintenance, or repairs.

Benefits of Electronic Car Titles

There are some clear benefits associated with an electronic titling system. Principally, it reduces or eliminates the need to handle, store or mail documents with the associated costs. This also leads to:

• More secure storage, as there's always a risk of loss, damage, or even theft when you store a paper document.
• Quicker notifications, which can lead to better customer satisfaction. This could help the dealership's CSI score and enhance customer loyalty.
• Reduction in fraud risk, by making it harder for anyone to roll back the odometer information on the title, or changing other title information.
• Faster funding, as the lender may directly receive data that's been checked for accuracy.
• Less paper, which is environmentally friendly.

Downsides of Electronic Car Titles

Nevertheless, there are some drawbacks to this system. For example, converting an electronic version can often take much longer if a state or other interested party requires a paper title. And receiving an electronic lien release in certain states may also take much longer than before. In some cases, this process could take months._[2]

While some states seek to offer an expedited printing service, this will typically come with a higher cost. Also, it may often take time for the DMV to process a lien release. The lender must confirm that the other party has satisfied the lien through a specific online process instead.

The Future of Car Titles

It seems likely that more states will adopt electronic car titles soon to help reduce costs and increase efficiency. Still, many states will likely retain paper copies for those who do not have digital access.

Electronic or Paper Titles, ACV Has You Covered 

Regardless if you bought a vehicle with a Paper or E-Title, ACV has an entire titles department that supports buyers and sellers through the title transfer process. ACV even has tools like ACV Title Hub, a place where dealerships can see up-to-date statuses in one easy spot. If you are a car dealer looking for hassle free car auction to pick up additional inventory register with ACV for free.

Sources

1. Learn the basics about electronic lien and title (ELT). Retrieved July 2023 from https://www.wolterskluwer.com/en/expert-insights/what-is-elt-and-which-states-use-it.

2. Electronic card tokens: how they work and how to get a paper copy. Retrieved July, 2023 from https://www.dirtlegal.com/blog/electronic-car-titles-how-they-work-and-how-to-get-a-paper-copy.