No, a bank itself does not transfer a car title. The actual title transfer is a transaction between the buyer and seller, typically processed by a state agency like the DMV. However, banks play a critical role if there is an outstanding loan on the vehicle. The bank holds a lien (a legal claim on the asset as collateral for the loan) on the title until the loan is fully paid off. To complete a sale, the seller must first pay off the loan to get the title released from the bank.
The process involves several key steps. First, the seller must contact their bank to get the 10-day payoff amount, which is the exact sum needed to close the loan account. After the seller receives payment from the buyer, they send the payoff amount to their bank. The bank then processes the lien release and sends the clean title (a title with no liens) either directly to the seller or to the buyer, depending on the bank's procedure and state law. This can take a few days to several weeks.
Once the seller has the clean title in hand, they can sign it over to the buyer. The buyer then takes the signed title to their local DMV to officially register the vehicle in their name and receive a new title. If you are the buyer, it's crucial to verify the payoff process directly with the seller's bank before handing over any money to avoid scams involving vehicles with outstanding loans.
| State | Typical Lien Release Processing Time | Notary Requirement for Title Transfer? |
|---|
| California | 10-15 business days | Yes |
| Texas | 7-10 business days | Yes |
| Florida | 5-7 business days | Yes |
| New York | 14-21 business days | Yes |
| Illinois | 10 business days | No |
| Arizona | 7-14 business days | Yes |
