How to Put a Lien on a Vehicle
Key Takeaways
- If you own the vehicle, the vehicle owner/title holder can go through the DMV to put a lien on their vehicle; however, if the car is still financed, the bank will hold the title and have lien on vehicle until it is paid in full.
- 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.
- Other parties outside of the bank or vehicle owner who can place a lien on a vehicle and reasons including unpaid mechanic repair bills, failing to pay taxes, parking tickets, and so forth.
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A lien is defined as, “a right to keep possession of property belonging to another until a debt owed by that person is discharged.”
One day, you may find yourself needing to place a lien on a vehicle, whether you’re selling a vehicle and need to add a lienholder or you’re a mechanic who needs to be paid for the work done.
Below, we have outlined what you need to know about putting a lien on a vehicle and reasons a lien might be placed on a vehicle. Read on to learn more!
How to Put a Lien on a Car?
THE BANK HOLDS THE TITLE (OR ANOTHER PARTY)
When it comes to putting a lien on a vehicle, the first aspects to consider are who currently holds the title and whether or not you have a contract in writing related to the ownership of a vehicle.
A vehicle title is a document that proves your ownership of your vehicle. Titles contain the Vehicle Identification number (VIN), make, model, and year of your vehicle, as well as the owner’s name and address.
While it’s most likely you’ll need the title or a written contract of ownership, laws, processes, and other specifics vary by jurisdiction. If your car is financed, then the bank has a lien on your vehicle and holds the title until the loan is paid in full.
Once you’ve completely paid back your car loan, the bank will release the lien and mail you your title.
I CURRENTLY HOLD THE TITLE
You may own the vehicle, have the title, and you’re trying to sell the car. Here are the steps you can take to add a lienholder to the title.
Step 1: Visit DMV
Head to your DMV or the state authority for issuing vehicle titles.
Step 2: Get title application.
Fill out the title application and provide your personal information, vehicle information, and lienholder information, then sign.
Step 3: Present application to clerk.
Bring your application to your local county clerk and pay the fee to add a lien holder. You may be asked to show loan documents.
Your county clerk will verify the application and file it. If you’re unsure about what to bring to your county clerk, reach out to them directly for more information to ensure you’re prepared when you go in.
Different Reasons for a Car Lien
Here is a list of car lien and reason why a lien may be placed on a vehicle:
THE VEHICLE IS FINANCED
The most common reason a title has a lien is when a vehicle is financed. In this case, your auto lender is typically the lienholder. If you don’t repay your loan, the lienholder has the right to foreclose, sell, or repossess your vehicle.
MECHANIC PLACED A LIEN ON CAR
If your vehicle received repairs or was towed and the bill was not paid, the shop that performed the work may be entitled to a “mechanic’s lien.” This allows the mechanic to recover their money.
PARKING VIOLATION/TICKETS
If your vehicle has received parking tickets or other related fines, the city, county, or state the fines were received in can impose a lien.
DEFAULTED ON LOAN
The original signer or co-signer on a loan may put a lien on the vehicle if the owner defaulted on the contract.
FAILED TO PAY TAXES/FEES
Failing to pay taxes or registration on your vehicle can result in a lien on your title.
THE CAR DOESN’T HAVE A CLEAN TITLE
A vehicle with a clean title does not have any loans or liens against them and has never been deemed a total loss by an insurance company. A vehicle without a clean title could still have a lien on it, and it’s possible the seller neglected to tell you this information or buried it in a convoluted purchase agreement.
ESTATE PLACED A LIEN ON CAR
If a vehicle was part of an estate, its lien may have to be settled in probate. If you bought a car through an estate, it may need to remain available to the estate until all of the financial obligations are cleared.
SCAMMY ACTIVITY
If you know you’ve paid your lien back in full on your vehicle, the alleged “lienholder” may actually be a scammer.
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If you have a title loan or title pawn with another company, Auto Money may pay it off at a lower interest rate!
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FREQUENTLY ASKED QUESTIONS
Is a car lien and car loan the same thing?
A lien is defined as a legal claim on property or other assets, typically one that requires a loan. When you take out a loan on a vehicle, the lender becomes the lienholder and releases your title to you once you’ve repaid the loan in full.
Who is the lienholder for a car?
Typically, your auto loan lender is the lienholder for your car, and in most states, owns the title to your vehicle.
What is the role of the lienholder?
As a lienholder, you have continuing legal interest in the vehicle’s title. This means if the owner of the vehicle does not pay back the loan on time, the lienholder can potentially repossess your vehicle.
Can a vehicle lien hurt my credit?
The type of lien on your vehicle determines whether or not your credit is affected.
Statutory and judgment liens can negatively impact your credit score and can affect your obtaining financing in the future. Consensual liens that are repaid do not negatively impact your credit.
What’s considered a good lien vs a bad lien?
Here are the differences between the different types of liens:
- Consensual liens are considered “good liens” and do not negatively impact your credit. This type of liens includes mortgages, vehicles, and business assets.
- Statutory liens are considered bad and can remain listed on your credit for seven years. This type of liens includes mechanics and tax liens.
- Judgment liens are considered the most severe type of lien and can remain listed on your credit for up to seven years. These types of liens occur when a court grants financial interest in your assets to a creditor.
How long can a lien stay on your credit report?
How long a lien will stay on your credit report depends on the type of lien it is. Statutory liens and judgment liens stay on your credit report for seven years, while consensual liens do not impact your credit report.
Will a vehicle lien impact my auto insurance?
When you finance a vehicle, your lien holder may require you to obtain auto insurance that protects the creditor in the case that the vehicle is in an accident, is damaged, or stolen.
You may also see your lien holder’s name on your policy. Once you pay off your loan, you can opt out of the additional coverage required by your lien holder.
How do I remove a lien from my credit report?
After you’ve fully repaid your lien, request a letter from your state’s tax agency stating you have repaid the debt.
Often with an auto lender, they will send a lien release to the DMV and then you will receive an updated title in the mail.
How to tell if a car has a lien?
If you’re purchasing your vehicle from a private seller, it’s important to check the lien status. Here’s how you can do so:
- Run a Comprehensive VIN Search: You can use services such as iSeeCars to run a free VIN check. This will provide a comprehensive analysis of the vehicle in question, including title and lien information provided by the DMV.
- Get a vehicle history report: A vehicle report like CARFAX and Autocheck can provide a vehicle’s lien history.
How to put a lien on a vehicle?
To place a lien on a title, you’ll need to follow the process set forth by your state’s DMV.
Most likely, you’ll have to complete a lienholder application and submit it along with the required fee and any required documentation. The process may vary by jurisdiction, so check with your local DMV for specific instructions.
Remember, putting a lien on a title usually involves a legal and financial process, so be sure to contact your state’s authority on the matter to receive the most up-to-date and correct information on the process.
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At Auto Money, everyday can be a payday! We get you the cash you need fast so you can pay bills, home repairs, auto repairs or whatever else life throws at you.
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Sources: CapitalOne, Progressive, Carfax & ISeeCars.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice and/or legal advice. We are not financial advisors nor legal professionals , and the content provided does not constitute financial or legal advice from a licensed professional. The content of this article does not replace personalized advice from a licensed professional who is aware of your individual circumstances.
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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
A title loan is a quick and easy way to get the cash you need, using your vehicle’s title for collateral instead of your credit score. The amount will be determined by our expert appraisers. Auto Money offers competitive interest rates and gives you the most money for your title with instant approval. And the best part is, you get to keep driving your vehicle!
SC Consumer Loans: Your Rights and Responsibilities
Disclaimer: This is a high interest loan. You should go to another source if you have the ability to borrow at a lower rate of interest. You are placing your vehicle at risk if you default on this loan.
Title Pawns in Georgia
A title pawn is a quick and easy way to get the cash you need, using your vehicle’s title as collateral towards borrowing money. At our Georgia Auto Money stores, you have 30 days to repay the title pawn. If you are unable to pay off the balance within 30 days, Auto Money’s professional and courteous staff is available to discuss repayment options with you.
Title Loans in North Carolina
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