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Almost automated banking.

Last week, I decided to sell my little hatchback and buy something bigger, so that we can do more camping, and I can fit the large rescue dog in the back.

I paid off my car loan several months ago, and had received a message from the bank saying the loan was cleared. I found a buyer for my car and off I went on my merry way to hand it over at the RTA to the new owner. We got 75 per cent of the way through the process, when the RTA officer said "Your car still has a loan on it, we cannot transfer it."

Being 100 per cent sure that I had, in fact, cleared the loan, I was somewhat surprised to learn that four months later, the bank still owned my vehicle, according to the online system. Cue panic! Luckily the buyer was a very understanding couple, who had had exactly the same thing happen to them when they sold their vehicle (and banked at a completely different bank).

I dashed to the bank to be told, "Oh, yes you need to request a loan release from the bank." Apparently even if you pay off the entire loan, the bank will not release your assets until you ask them to. This process usually takes two to three days. However, after much jumping up and down at the local bank branch, and phone calls to the bank every two hours, the loan was released within 24 hours. I sold my car and purchased a 4x4 (no bank loan for me again thanks!!).

Finding it somewhat strange that you have to ask the bank to release your loan once you have paid it off, I sent a query into the bank to ask why. The bank confirmed that a clearance letter is an RTA requirement and customers also have the option of applying via Online Banking. According to the bank, the customer will receive an SMS within two working days from the RTA that the loan on the car has been cleared.

The problem is not the process of applying for a loan clearance letter itself, but rather that the process is not communicated to you once you have paid off the loan. Why is this even necessary. Surely if the loan is paid in full, the process should be automated to release your vehicle/assets from the bank's ownership? If it cannot be automated for some reason, then surely the customer should get an SMS or an email saying please now apply for a clearance letter? What are your thoughts?

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Publication:CPI Financial
Date:Oct 15, 2017
Words:447
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