Use caution when accepting payoff payments on motor vehicle title loans

Use caution when accepting payoff payments on motor vehicle title loans

by The CAB Man Texas on February 10, 2017

  • Review your company policy regarding acceptable methods of payment for motor vehicle title loans in Texas as a Credit Access Business. With tax season upon us, there will be an increase in the number of folks paying off loans, especially motor vehicle title loans as the income tax refunds start to pour in over the next few weeks.  For that reason, it is a good time to issue this reminder.
  • Many seasoned companies choose to only accept certain forms of payment on the pay-off a title loan prior to releasing that title for certain reasons.  For example, what if a paper check is accepted and that check bounces later?  Your business could have released the title to the customer without being paid!
  • Accepting debit cards without getting the consumer sign the debit card receipt could be viewed as a swipe transaction versus a signature transaction and it could result in “chargeback.” Days later this would occur which would also mean that your business could have released the title without getting paid.
  • Allow several days to pass before relinquishing the title so that you are assured the payment has successfully cleared. (If you accept these payment types).
  • There is no right or wrong way of doing this. We cannot hold a consumer’s title for an extended period. (10) Days is what we have seen as the norm for an acceptable amount of time of holding on to the vehicle title.  In some cases, where if a check is used, the title will be released after the check clears. This normally takes 3 to 5 business days. Other cases involving a debit card, the store-front requires the consumer to do a signature transaction where the consumer signs the receipt as they would at a restaurant. Of course,
  • Cash is always ideal for Credit Access Businesses in these situations, but not everyone uses it and consumers may not prefer it when amounts are larger.

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or

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