What Is an Electronic Car Title?

The ELT system lets lenders that are listed as lien holders on vehicle titles communicate digitally with state DMVs or their equivalent agencies. This system facilitates paperless transactions for the addition and deletion of lien holders, while providing vehicle owners with the option to take possession of a paper certificate when liens have been satisfied. As of 2015, more than 20 states participate in the ELT system. Depending on an individual state’s laws, lien holder participation in the ELT system is either mandatory or voluntary.

Storing titles in a digital format has several advantages over maintaining paper files, including reducing the need for storage space, ease of access to records, reduced printing, and the ability to send titles digitally vs. mailing paper certificates. These advantages enable information to be exchanged faster and at a lower cost than processing physical certificates. Maintaining vehicle titles in an electronic format also reduces the potential for fraudulent activities, such as counterfeiting, that usually involve paper titles.

When the purchase of a vehicle is financed, the lender is listed on the certificate of title as a lien holder. This listing will stay on the title until the loan is paid in full. When a car is purchased in a state that participates in the ELT system, the title will be held by the lender in a digital format. Once the borrower pays off the loan in full, the lender will transmit a release of the lien to the DMV, which will delete the name of the lien holder on the title and mail the modified certificate to the owner of the car.

The biggest issue with an electronic title is that if the owner wants to sell the vehicle or transfer ownership, there may be a waiting period of a few days before the electronic title can be converted and mailed as a paper title. For example, Florida's Division of Motorist Services recommends that titles be maintained in a digital format after the lien has been satisfied. Vehicle owners in the state can request a paper title at any time, but the agency typically takes two days to mail the title. Florida does offer same-day title printing at specified tax collector's offices, but this type of service may not be available in all states. If same-day printing isn't convenient or available, vehicle owners who want to sell a car or transfer ownership can avoid the stress of this type of delay by requesting a paper title well before the anticipated date of the transaction.