What is a Car Lien?


Key Takeaways

  • A lien is the right to possess property belonging to another person until the borrowed amount is paid back. The lienholder in the case of a vehicle lien is typically your auto loan lender.
  • If you’re planning to sell your car and it has a lien on it, there may be a few extra steps to take in order to sell your vehicle.
  • If you’re planning to buy a car from a private seller, be sure to check the vehicle’s lien status before making the purchase to ensure ownership can be transferred to you.

       

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      What You Need to Know about Car Liens

      A car lien is your lender’s, or lien holder’s, legal right to possess your financed vehicle until the debt is paid back in full. If you took out a loan when you purchased your vehicle, you’ll have a lien on it until you pay off the borrowed amount.

      A lien may also be put on your vehicle if you borrowed money against it for repairs, used your vehicle as collateral to get a loan, or you owe money for fines or unpaid parking tickets. From a legal standpoint, you don’t have full ownership rights to your vehicle until you pay off the borrowed amount and the lien is removed.

       

      How Do I Get a Title for a Car With a Lien (in Most States)?

      Once you make your final loan payment, your lien will be released. You’ll either be notified by proof sent by your lender or it will be released electronically if your state and lender have an electronic lien and title program.

       Here are the steps involved in getting a vehicle title with a lien:

       

      Step 1: Understand the Lien Status

      It’s important to know the exact nature of the vehicle’s lien. A vehicle may have a lien due to an outstanding loan, unpaid repairs, parking tickets, or other financial obligations.

       

      Step 2: Contact the Lienholder

      Contact the financial institution or individual who placed the lien on the vehicle. The lienholder could be a credit union, bank, or private lender.

       

      Step 3: Pay Off the Lien

      Work with the lienholder to determine the best way to pay off the borrowed amount or debt. This could involve a payment arrangement or negotiating a payoff amount.

       

      Step 4: Obtain a Release of Lien

      Once the owed amount is paid off, you’ll need to request a release of lien form from the lienholder. This document confirms the car lien has been released.

       

      Step 5: Submit Documentation to the DMV

      Gather all necessary documents, including vehicle registration, proof of ID, and release of lien documents, then visit your local Department of Motor Vehicles (DMV).

       

      Step 6: Complete Title Application

      At the DMV, you’ll need to fill out the application for a new title and provide all required information and documents needed, such as proof of insurance or emissions testing if applicable.

       

      Step 7: Pay Fees

      There may be fees involved for transferring your title and registration. Fees vary by state, but they may include taxes, processing fees, or other charges.

       

      Step 8: Wait for Processing

      The DMV will need time to process your application and verify the lien release. The DMV’s workload and any additional requirements may impact the processing time.

       

      Step 7: Receive the Title

      Once the DMV approves and processes your application, you’ll receive the new title for your vehicle. Your new title will reflect the car’s lien has been lifted.

       

      Step 8: Update Vehicle Records

      Make sure your insurance, registration, and all other vehicle records are updated with your new title information. This will help you avoid any future issues.

       

      Step 9: Store Documents Safely

      Make copies of all documents related to the lien release and title transfer and keep them in a safe, accessible place. You may need to reference these documents in the future if you decide to sell your vehicle.

       

      Step 10: Verify Title Accuracy

      Check over the new title carefully and note that all the information is correct. This includes the vehicle identification number (VIN) and owner details. If you see any errors, notify the DMV immediately.

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      FREQUENTLY ASKED QUESTIONS

      Who holds a lien on a car?

      The individual or institution that holds the lien on your car is called the lienholder and is typically your auto loan lender. Depending on your state’s laws, your lienholder will file your lien with the DMV or state’s transportation agency.

      In some states, a mechanic may also be able to place a lien on a vehicle if they perform work and are not paid for that work within a specific amount of time.

      Where can I go to get information on a specific vehicle lien?

      It’s important to know the status of a vehicle’s lien before you purchase it from a private seller.

      Here’s how you can do this:

      • Check with your state’s DMV or transportation agency. Some states allow online lien searches using the vehicle identification number (VIN). You can locate this 17-digit number on the lower left side of a car’s windshield, inside the hood, on the engine, or where the driver’s side door closes. You may also find this number on the vehicle’s registration card and insurance documents.
      • Look at the vehicle’s title. If there’s a lien, the title might have the lienholder listed.
      • Get a vehicle history report. This report can provide a lien history and other key vehicle information, like previous owners or major damage. Vehicle history report providers include the National Motor Vehicle Title Information System, Autocheck and Carfax.
      What happens if I want to sell my car but don't own the title yet?

      If you’re looking to sell your vehicle and it isn’t paid off, you’ll likely have to pay off the outstanding loan to get the title transferred to you. Then, you can transfer the title to the new buyer.

      If you live in a non-title-holding state, you will have possession of your title, not the lienholder. In some states, the lienholder’s information may be listed on the title, and it may require specific actions to release the lien once you’ve satisfied your loan.

      If you need to sell your vehicle and can’t afford to pay off the loan, talk to your lienholder. The potential buyer may be able to make a check out to the lienholder for your loan’s remaining amount to transfer the title.

      What happens to the title if I buy a used car from a private seller?

      If you’re purchasing a used vehicle from a private seller who doesn’t own the car outright, typically, you won’t be able to get the title until the seller pays off the borrowed amount and the lienholder transfers the title.

      How do I get a lien removed after paying off my vehicle?

      After you’ve paid off your car loan, obtain a vehicle title lien release from your lender to get the DMV to transfer the title to your name.

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      ALREADY HAVE A TITLE LOAN WITH ANOTHER COMPANY, AUTO MONEY CAN STILL HELP YOU!  

      If you have a title loan or title pawn with another company, Auto Money may pay it off at a lower interest rate!

      Interested?

      Title Loans in South Carolina

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      SC Consumer Loans: Your Rights and Responsibilities

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      Title Pawns in Georgia

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