New NHTSA rules for paperless title transfers

A new NTHSA rule paves the way for paperless title transfers, reducing opportunities for fraud and simplifying the vehicle sale process.

The new rule, spotted by Motor1 in a Sunday report, establishes guidelines for states to enact procedures that will allow buyers and sellers to bypass traditional paper odometer verification and document odometer readings electronically. On paper odometer readings were the final barrier to It allowing states to move to paperless vehicle transfers. With the rule, states now have a system to digitize existing records or new registrations as an interim measure before implementing a fully electronic process. 

NHTSA’s finalized rule was written to improve the efficiency of both processing title transfers and storing odometer information.

“Since the agency believes that electronic disclosure will be less costly than paper disclosures, even a minor cost savings per disclosure could lead to large societal savings,” NHTSA said in its summary. 

Previously, states could individually petition NHTSA to substitute electronic verification and record-keeping for traditional methods. With this new rule, states need only follow this guidance. No petition is necessary.

Under the new rule, odometer verification will be required for vehicles up to 20 years old beginning with model year 2010 vehicles. This rule was put into place in response to the increased longevity of vehicles sold in the United States. The average age of a car on the road is now up to 12 years. Prior guidance only required odometer verification on cars up to 10 years old.

NHTSA says electronic records are harder to forge and its system has robust security and and authentication. which will help prevent fraudulent odometer readings.

The version of the rule posted online does not specify the date the new rule goes into effect, only saying it will be valid starting 90 days after it is posted in the federal registry. That would be the earliest states could potentially implement the new electronic odometer verification system, though it is unlikely many states will be prepared to roll out the system that early.

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