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E-titles and e-liens slowly e-liminating paper docs

It's been a long time coming, but electronic lien and title documents, known as ELT, have replaced paper titles for more than half of registrations nationwide. And more auto lenders and state motor vehicle departments are switching from paper records all the time.

Electronic titles mean that customers and lenders -- as well as dealerships -- can clear the "paperwork" faster on both new- and used-car transactions by creating and sending documents online instead of using the mail or waiting in line at state motor vehicle departments to transfer the title.

"The market is moving very, very quickly," away from paper records, said VINtek Chairman Harvey Lamm.

VINtek, a Philadelphia company, provides ELT programs for auto lenders and is signed up as a vendor with DMVs in several states that use electronic titles. Lamm may be better known as a co-founder and former chairman of Subaru of America Inc., based outside Philadelphia in Cherry Hill, N.J.

"The number of states that are mandating it (electronic documents) is growing by leaps and bounds. It seems like it's become this inevitable wave," said Tim Snyder, a developer for Decision Dynamics Inc., Lexington, S.C.

He said Pennsylvania, for instance, an early adopter for ELTs, made them mandatory last year. Arizona is making them mandatory at the end of May, Snyder said.

"Not only is it more convenient, but also in past, electronic made everybody nervous. 'If I've got it on paper it's real.' But the way we store data now there's an electronic trail and it's more reliable than paper titles," he said.

Tipping point

Lamm acknowledged that ELTs got off to a slow start in the mid-1990s, but he said adoption has reached a tipping point. "Lienholders do not like to operate two different systems -- electronic and paper," he said. Lamm left Subaru after Fuji Heavy Industries bought out independent distributor Subaru of America in 1990. He joined VINtek as an investor in the late 1990s.

When VINtek started, the "two systems" argument weighed against switching to electronic documents. Since then, more of the auto loan process has moved online, including credit applications and also to an extent finance contracts. At the same time, customers are more comfortable with electronic signatures and electronic documents than they used to be.

Meanwhile, over the last several years, Ford Motor Credit, Chrysler Financial, GMAC Financial Services, Toyota Motor Credit Corp., Nissan Motor Acceptance Corp., American Honda Finance Corp. plus many other banks and credit unions have begun to accommodate electronic titles.

Now, Lamm said, the "two different systems" argument has tipped the other way, and for some lenders it's now easier to switch to ELTs than it is to stick with paper documents.

State by state

At the same time, state motor vehicle departments are also switching.

Snyder, the developer for Decision Dynamics, said Pennsylvania, which was an early adopter for ELTs, made them mandatory last year. Arizona is making them mandatory at the end of May.

"Not only is it more convenient, but also in past, electronic made everybody nervous. 'If I've got it on paper it's real.' But the way we store data now there's an electronic trail and it's more reliable than paper titles," he said.

Larry Highbloom, president and CEO of VINtek, said that starting Jan. 1, 2010, Louisiana joined 14 other states that already adopted ELT programs.

Highbloom estimated that because several big states now use ELTs exclusively, they now account for about 60 percent of registrations nationwide. Most states accept ELTs even if they don't require them, he said.

Recent conversions to ELTs include Texas, which expanded a pilot program statewide in late 2009, and California, which switches to ELTs exclusively in January 2012, according to VINtek.

Green and lean

The American Association of Motor Vehicle Administrators, based in Arlington, Va., endorses the idea of ELTs as faster, more convenient and more accurate than paper titles.

Data are more accurate, because electronic documents can be set up to double-check for typos. Electronic documents can also make sure data entry is consistent within the same document -- for instance, making sure names and VIN numbers are consistent throughout.

Not incidentally, some states have found that switching from paper also allows them to cut staff, Highbloom said.

States are also keen to promote green initiatives that save paper. Years ago, Highbloom admitted, VINtek didn't foresee this as a selling point for electronic documents.

He said, "We were green before green was cool."

You can reach Jim Henry at autonews@crain.com

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