Wisconsin buyers will no longer receive vehicle titles if there are liens on their cars, state officials announced Thursday.
Any vehicle title with a lien, a legal claim on property typically paid for with a loan, listed on or after July 30 will go straight to the lien holder rather than the vehicle owner. And lien holders will be able to choose whether they want to receive either paper or electronic titles, a first for Wisconsin, which has previously used only paper titles, the Division of Motor Vehicles said.
People who already have car titles, including those that list lien holders, will not be affected by the change, said Mitchell Warren, director of the DMV Bureau of Vehicle Services.
The title changes were approved by the Republican-controlled Legislature last year as part of the two-year state budget.
Wisconsin will be the 38th state in the country to become a title-to-lien holder state, Warren said.
"National lenders are used to this," Warren said.
People who decide to sell their cars will be able to do so even if they still have a lien, he added, but will have to contact the lien holder so the title can be delivered. They would still need to pay off the vehicle loan.
Electronic titles will mean greater convenience and lower costs, the DMV said. The state expects to save money on things like printing and postage costs as many lenders who will choose to receive electronic titles, Warren said. It will be more timely for banks and other lenders as well as consumers, he said, and will help build an entirely electronic system in the future.
And Warren said the move to electronic titles will also cut back on vehicle title fraud.
Vehicle fraud is a nationwide problem that can cause consumers to buy stolen or unsafe cars.
"What we're really talking about is electronic records rather than an insecure piece of paper," Warren said.
Owners of vehicles with liens that are purchased on or after July 30 will receive a "confirmation of ownership," and then will receive the title when all of all of the liens are paid in full.
"A confirmation of ownership does not replace a vehicle title," Warren said. "What it does do is confirm that a person owns the vehicle and specifies that there is a lien on that vehicle."