Why Outdated Title Processing is Holding Back Dealerships
By Kaitlin Gavin, Vice President & General Manager of Dealertrack Registration and Title Solutions
& Sandy Moon, Associate Vice President of Client Experience at NextGear Capital
The premium on speed seems to increase every day. Next-day or even same-day delivery of products has become standard thanks to Amazon. A host of start-ups now offer meal kits for making gourmet dinners in a matter of minutes. If you need to send money to a friend or business, a mobile app can transfer the dollars instantly.
For some reason, though, processing vehicle titles — a critical part of the car-selling process — is still woefully slow, and it’s likely costing your dealership money. It’s holding back sales or preventing them from happening altogether. It’s causing your staff to waste time and effort to clear these titles, and it’s keeping you from getting funds faster.
So, why has title processing been left behind and what can be done to speed it up? In short, the answer lies in embracing new practices and technologies for handling the transfer of titles. It requires rethinking the way titling has been done for years to create a faster, more efficient process for dealers, lenders and consumers.
Ending the Paper Chase in Auto Financing
Auto titling remains a slow, tedious process for many dealerships largely because they’re following procedures that have been in place for years or even decades. While much of the business world has moved into the digital age, title processing is still a paper chase for many dealerships. On average, dealerships are looking at two or even three weeks that go by as they initiate payoff, verify and finalize the payoff amounts, write and overnight checks and deal with any payoff surprises that might come up.1
While all this time is going by, holding costs are rising too. Research shows that dealerships pay about $32 a day in holding costs, on average, for every vehicle that sits on the lot. Let’s say you take in 25 trades per month, and it takes 15 days each for title release and payoff. Multiply that by 12 months and the holding costs add up to $144,000 each year.2
Waiting also makes it more difficult and expensive to handle any payoff surprises that emerge. You might have to cut and overnight new checks or track down additional signatures. Without the title in hand, you can’t sell the vehicle at retail and will have more difficulty selling it at a wholesale auction.
Using Technology to Save Time and Money
The good news is that the title process doesn’t have to be this way. With the right partners and technology, the time and effort to process a title can be dramatically reduced, so that it takes days instead of weeks. Payoff quotes and requests can be sent directly to lenders electronically. Payments and title release can be handled electronically too. Along with faster turnarounds, frustrations can be reduced with more visibility into details and tracking of each stage of the process.
This speed directly translates into savings for your dealership. Let’s say you could cut 10 days off the time it takes to get a title released. Using the example above, you could be saving $96,000 over the course of the year.
The benefits, though, go beyond savings in holding costs. You are also able to reduce errors by seeing details up-front through a digital version of the title. You can identify co-owners, like an ex-spouse, listed on the title that the person trading in the vehicle forgot to mention.
This accelerated title process can also help you sell cars faster at retail and wholesale — increasing the all-important inventory turn. If it’s a trade-in earmarked for auction, industry research shows that a vehicle is nearly twice as likely to sell at auction on first pass when it’s accompanied by its title.
If it’s a vehicle you plan to sell at retail, using new technologies to process titles can remove one more time-consuming step to get the vehicle ready for listing. Our data shows that it typically takes the average dealer seven to 10 days to make a car customer-ready, although about 20% of dealers manage it in four days or fewer. When you handle title release and payoff more quickly and efficiently, it can help you join the top tier of dealers who have mastered the art of keeping inventory moving quickly.
As an added bonus, faster title processing makes life easier for your staff. Whereas staffers previously spent countless hours each week tracking and reporting with lengthy phone calls to lenders, waiting for updates and writing checks, now they can concentrate on other tasks that move deals along more quickly and contribute to your dealership’s customer satisfaction ratings and bottom line.
These savings in time and money are even more important given the current market. With today’s razor-thin profit margins, it’s important to find ways to set up every part of your operation to maximize speed, efficiency and transparency. You can’t afford to miss a sale or funding because you’re waiting on a title.3
1. Based on average industry timeframe for vehicle title release and vehicle payoff process of 18+ days, as determined by Dealertrack data.
2. Manheim Online Dealer Community survey 2016
3. Source: 2014 (2X) & 2018 (1.6X) Manheim Articles “Impact of Delayed Titles at Auction”