Customers are continuing to spend less time at a dealership from beginning to end. According to the 2018 Cox Automotive Car Buyer Journey Study, car buyers spend 60 percent of their time online. They want to come in with the dealership already aware of what they want, close the deal and wrap up all subsequent paperwork as quickly as possible.
Dealerships have made great advances to make this a reality. However, there is still one piece of a deal that is out of the hands of both the customer and the dealer — the acceptance of payoff and the release of the title for a vehicle that is traded in.
Our data shows that the traditional payoff and title release process for trade-ins can average anywhere from 12 to 18 days or more, because each lender sets its own process. Without that title in hand, the dealer risks selling a vehicle that may not belong to him or her yet.
And this process includes many time-consuming tasks: lengthy hold times with lenders waiting to verify payoff amounts, hand writing checks that are then overnighted for delivery, more phone calls and hold times with lenders to address short pays or to track the status of a title after payment was mailed, and so on. Dealerships often need more than one clerk just to manage these details. And, as all this is taking place, the car is sitting on the dealership lot, not being sold — just occupying space. Dealers spend on average $32 per day for each car that sits on their lot, according to a 2016 Manheim Online Dealer Community survey. Multiply that $32 by the average number of days your trade-in waits for title, then multiply that by the average number of trades you take in per month. That total loss quickly adds up; it’s not unheard of to be tens of thousands of dollars per year, or higher.
Technology advancements have made it possible for trade-in titles to be released as fast as four to six days, allowing dealerships to move inventory much faster and save money across the sales floor. By leveraging technology and moving the entire process online, dealers can receive an accurate payoff quote and expedite payment to the lender electronically. In fact, through ACH, payoffs and the approval of funds can happen within three business days.
Full lienholder details can be viewed before initiating payoff — eliminating the guessing game of what may appear on the title to unwind the deal — and payment as well as title status can be tracked 24/7, eliminating the need for follow-up calls by staff. This streamlined process virtually ends the short pays, lienholder surprises, check writing, phone calls and spreadsheets/log books that plague the traditional manual process. This fully electronic process also gives complete transparency to dealers as well as lenders while also creating consistency. This is fast becoming the new industry standard — a standard that is easy and efficient for dealers, lenders and customers.
What does this mean for dealers? First, inventory may be moved more quickly. Second, staff can spend less time dealing with payoff calls, title tracking and bookkeeping, which frees up their time to make more sales and better serve the dealership and its customers. This process helps the dealership save a significant amount of time and money and, in turn, improve its bottom line. Ultimately, the dealership is more productive and profitable.
Dealers have known for a long time that the title release process is time consuming and outdated. It’s time to accelerate and modernize this process the same way the rest of the dealership and car-buying processes have been updated. Going electronic will help us all close more deals and get more customers on the road in a faster and more efficient manner. Cheryl Miller