Category: Do i need a lien release to sell my car

The lien is there because you owe someone money, and the car is collateral. Once you pay them back, you can remove the lien and do whatever you want with the vehicle.

do i need a lien release to sell my car

But removing a lien on a car isn't one of those life hacks they teach in school. You might not even realize you have on until you try to sell your vehicle and find out you can't. If you have a lien on your car and you're not sure what comes next, then this guide is for you. Keep reading to learn how to remove a lien on your title in a jiffy.

As a result, the first step to getting rid of the lien is to determine who has one on your car and why. The process differs according to who placed the lien on your title and why.

You can't sell a car privately with a lien on it because the car isn't yet yours to sell. Here's how to remove it in six relatively easy steps.

Who do you owe, and how much? That's the critical question when you want to remove a lien from your title. You can't do anything else until you pay back the loan. Because if there's a lien on your vehicle, then the lienholder is the legal owner with rights, including the right to repossess your car if you don't pay up. In some cases, you may not need to pay the loan back because the buyer might assume the debt from the lienholder.

However, this is more likely to be the case when you sell to a business than if you sell to a private buyer. You can sell a car when you still owe money to the loan company that financed it. Start by finding out the vehicle's value with a trusted source like Kelley Blue Book. You can use the proceeds of the sale to cover the remaining balance on the loan. However, you may need to chip in yourself if you are upside down on the loan. The process, however, takes longer because you can't transfer the title to the new owner before removing the lien.

If you have a private buyer, then you need to be transparent about the process and work in a way that feels safe for both of you. Selling to a dealer or another business usually means the dealer takes care of the process for you. Usually, the process happens quickly, but you can doublecheck by looking at the car title or checking with your DMV. If you just paid back the lienholder, give them five full business days to sign the lien over to you as the sole legal owner.

They should also provide you with a lien release form stating that they recognize you paid the debtand they no longer have a claim on the vehicle. What you receive and when you receive it depends on state regulations. If your state allows a mechanic to place a lien on a vehicle, then it is likely that you need to go to court. You don't need to lawyer up. Instead, the mechanic needs to file the lien in court, and then the court needs to be notified when you pay it off.

Once the lienholder lifts the restriction, then you still need to remove their name from the title. For example, to remove a lien in New York stateyou need to:. Be sure you always apply with original documents.Browsers that can not handle javascript will not be able to access some features of this site. Some functions of this site are disabled for browsers blocking jQuery. The Office of. Close Search Box.

Official Website of Michigan. You are here SOS. Vehicles How do I file a complaint against a dealership, repair facility or mechanic? What should I do if I have a complaint about a car dealer or manager?

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If I need to title my vehicle in Michigan, where should I apply for my title? My spouse and I just purchased a vehicle from a private party, do we both need to visit a Secretary of State branch office to transfer the title?

How can I get an instant title?

How to obtain a lien release for a vehicle

I sold the vehicle; how do I get the title out of my name? The person I'm selling my vehicle to is asking that I leave my plate on it so he can drive it home. Should I do this? If I sell a vehicle to someone and I don't accompany the purchaser to a Secretary of State office or maintain a record of the sale, and the purchaser does not transfer the vehicle title into their name, am I liable for actions of the purchaser? If I lost the previous title before transferring the vehicle into my name and I can't find the previous owner, how can I get a title for my vehicle?

do i need a lien release to sell my car

I'm purchasing or acquiring a vehicle from my uncle my father's brother. Will I have to pay tax when transferring the title into my name? How do I convert my out-of-state title to a Michigan title?

How do I register my vehicle if the lien holder is holding the title out-of-state? Can the Michigan title application form be faxed to a customer out-of-state? My spouse died, how do I transfer the vehicle into my name? The mileage on my title is incorrect, how do I get it corrected?

How do I verify a lien holder?If you have a lien on your vehicle, you can still sell it, but the process will be more complicated. A lienholder is the financial institution or individual that holds the rights to the title of the vehicle.

While you may or may not maintain possession of a title with a lien, the lienholder's signature will be required to transfer ownership once all debts have been paid. The pay-off amount is the amount of money that will need to be paid to the financing company or other party to receive the title for the vehicle.

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This amount includes interest and other fees incurred up until the date your debit is satisfied, which could make the total slightly higher than your current balance. Once you've determined what the dollar amount is, you'll have a couple different options for how to sell a vehicle with a lien:.

In either case, the vehicle will be easier to sell if you owe LESS than its current worth. If you owe more than the vehicle is worth, you'll have a hard time selling unless you're willing to pay the difference. For more information, please refer to our page on Selling vs. Trading In a Car. The easier option of the two is selling your vehicle with a lien to the dealership where you intend to purchase your new car.

Once you give the dealer a power of attorney, the dealer will contact the lender directly and handle all financial arrangements. Please note that you are NOT trading in your car, because you don't actually own it. You must satisfy your loan first, and that's what selling it to the dealer will do.

The dealer will pay the existing balance and give you a check for any amount over the negotiated sale price. You may also choose to have this amount applied toward the purchase of a new car. Before the transaction is complete and you leave your car to the dealership, make sure you receive documentation that your lien has been satisfied.

Though more effort will be required on your part, selling a car with a lien privately could net you a higher profit.

How to Retitle Your Vehicle After You Paid Off the Loan

Since an escrow service will usually benefit both parties and make fraud attempts less likely, the fee for escrow services can often be split between the seller and buyer to reduce costs on either end.

Reasons you may have a lien on your vehicle include: The vehicle is financed and hasn't yet been paid off. Unpaid repairs. The vehicle was used in another transaction as collateral. Selling Options for Vehicles with Liens Once you've decided to sell your vehicle, you'll need to determine the pay-off amount.

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Once you've determined what the dollar amount is, you'll have a couple different options for how to sell a vehicle with a lien: Sell to the dealer. Sell the vehicle privately. This process is more complicated, but the negotiated sale price is often higher. Selling to a Dealer The easier option of the two is selling your vehicle with a lien to the dealership where you intend to purchase your new car.

Selling to a Private Party Though more effort will be required on your part, selling a car with a lien privately could net you a higher profit. Here are a few things you'll need to consider to make the process easier: Include the details of the lien in your listing.

What to Do Once You Pay Off Your Car

You'll list an advertisement for your car just as you would any other vehicle, with the addition of the lien information that buyers will need so as to avoid confusion. Sell in the location of the lienholder, if possible.

If the bank or financial institution holding the lien is located in the area you're trying to sell, this will make the transaction much easier.When you buy a car and use a car loan to pay for the purchase, the lender becomes a lien holder on the title and, in most cases, the bank that made the loan keeps the title until the car loan is paid off.

When you pay off the loan, the bank will send you the title, but the lien holder could still be listed on the paperwork. Each state has its own rules concerning car titles. Generally speaking, you should be able to go to your nearest DMV in order to fill out the necessary paperwork to ensure that the title department knows you have satisfied the conditions of your loan or lien.

Each state has rules that determine what a lender must do with a car title after the loan is paid off. In most cases, the title should be sent to the car owner within a certain period after the final payment was received.

When you get the title from the bank, look it over closely and read any paperwork that came with the title. In some cases you'll receive a free-and-clear title; in others, you'll need to go to the local Department of Motor Vehicles office to have the lien holder removed.

If you aren't sure, a trip to the DMV for some answers can prevent problems in the future. In states where paper titles are processed manually, when you pay off the car, the lender will send out the original title.

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The title with the stamp shows that the lender no longer has a claim on the car. To obtain a title that just lists you as the owner, go into the DMV and apply for a replacement title. In some states you're required to apply for a new title after you receive the lien satisfied marked title. Many states have changed their auto title handling to electronic systems, which may change how your paid-off car title is handled. With an electronic system, the lender can notify the state DMV title department by electronic means that you have satisfied the lien on the car.

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The DMV then issues a new title in your name without the lender and sends you the new title. With this type of system, you don't need to do anything to change the title you receive after paying off the loan. One problem that can significantly slow your receipt of the car title can occur if it is mailed to the wrong address. If you have moved since you bought the car, contact the lender several months before the last car payment is due and update your address.

Then when you send in the final payment, call the lender and confirm that the title will be sent to your current mailing address. Tim Plaehn has been writing financial, investment and trading articles and blogs since His work has appeared online at Seeking Alpha, Marketwatch. Plaehn has a bachelor's degree in mathematics from the U. Air Force Academy. Share It.When you pay off your car loan, you're entitled to receive a clear title for your motor vehicle.

The process varies from state to state, but the result is the Department of Motor Vehicles DMV issues a new certificate of title. Knowing how to remove liens and how to get the title after paying off car loans lets you establish legal ownership of your motor vehicles. A lien is a method of protecting the right of a property owner, seller, or lending institution to take legal action if a buyer or borrower doesn't make payments on a purchase or loan.

If you buy a new car and take out an auto loan, your seller or lender places a lien on your car title and becomes a lienholder. Vehicle titles contain the names and addresses of lienholders, which can be private individuals or financial institutions including credit unions. Your lienholder has the right to repossess the motor vehicle if you stop making your auto loan payments. Once you make your final payment, you have a right to obtain a lien release from the lienholder. When you get a lien released, you can receive a clear title from the DMV.

States use different processes for obtaining lien releases, so check with your lending institution and DMV for your state's requirements. Nevada, California, Pennsylvania, New York, and Ohio are some of the states in which lien release procedures depend on whether a lender uses the Electronic Lien and Title ELT system or a traditional paper title.

Lenders that participate in the ELT program have electronic titles and records. With many ELTs, a lien release triggers an automatic process for you to get the title after paying off the car loan.

Nevada's DMV prints and mails you a new paper title without a fee. You don't have to do anything except wait for about eight weeks to receive your new title.

California has a similar ELT process. Before making the last payment on your car loan, check the accuracy of your registration, mailing address, and your lender's information. After you make your final auto loan payment, the lender sends an electronic release to California's DMV.

Once the DMV receives the electronic release, it issues a new certificate of title and registration card showing you're the sole owner. ELT programs help states update vehicle information faster and maintain lien records more efficiently. States save on mailing and printing costs as well.

Under Pennsylvania's ELT Program, the state only prints paper titles when a lienholder releases a lien or when someone needs a paper title to assign or transfer vehicle ownership. In Ohio, if you want to sell your car and there's an ELT, first pay off the remaining amount of the car loan. The lienholder releases the lien electronically, and you pick up the title from the Ohio Bureau of Motor Vehicles BMV the next business day.

A lienholder using a paper title in California must sign on line 2 of the certificate of title for the lien release.

How to Sell a Car With a Lien

Once you get the signed certificate of title, check your address. If you changed your address and didn't update it with the DMV, draw a line through your old address on the title. Write your new address next to it. Send the signed certificate of title and a transfer fee to the DMV. The DMV removes the lienholder's name and issues a new certificate of title and registration card showing you as the sole owner. Once you make your last payment and want a lien released on a New York car title, contact your lienholder and obtain a notice for the New York State DMV.

The notice shows you don't owe anything on your car loan. Lienholders with paper titles have two options for giving you this notice. A lienholder's other option is sending an official lienholder letter to the New York State DMV telling the agency you made your final car payment. New York's DMV requires that the lienholder write the letter on the lienholder's official letterhead, The letter must contain all the information about the vehicle, and an official of the lienholder company or lending institution must sign it.

If the official signing the message isn't a loan officer, a notary must witness and notarize the signature.Congrats—you've finally paid off your car. Now what? After you've paid off your car loan, there are a few actions you should take, including checking for insurance savings, checking your credit scores and putting your savings toward a new goal.

It may seem counterintuitive, but credit scores can sometimes decrease when you pay off a loan. Checking your credit reports will give you an idea of what's going on with your scores, and will also give you the chance to make sure all your car loan information is accurate.

Selling, Donating, or Gifting a Vehicle

If your credit scores went down as a result of paying off the loan, it may have happened for a couple reasons:. There are many other reasons unrelated to paying off your car your score could have gone down, and checking your credit reports should help you understand why.

You can get a free credit report from Experian to see what's in your file. Get Your Car Title You just paid off your car and own it outright—now get the paperwork that says so. Your car title is a piece of paper that lists the official owner and any lien holders on your car. Depending on what state you live in, you may already have a title with your name on it. If you do, you live in what's called a non-title-holding state, which means that your state's Department of Motor Vehicles issues the title to the vehicle owner and not the lien holder.

In this scenario the lien holder is listed on the title, but is not the primary name. If you live in one of these states and just finished paying your car loan, you'll want to remove the lien holder from your title. This can be done by contacting your state's DMV.

If you live in a title-holding state, that means that the lien holder—the lender that financed your loan—will hold the title and it will only be released when the lien has been fully satisfied. Once you've paid off your loan, your lien should be satisfied and the lien holder should send you the title or a release document in a reasonable amount of time.

Once you receive either of these documents, follow your state's protocol for transferring the title to your name. This will allow you to show ownership and sell the car in the future, so get all this paperwork in order as soon as possible.

Look Into Different Insurance Coverage Options One advantage of paying off your car loan is that you may be able to get a better rate on your car insurance. First, notify your insurance company that you've paid off the loan so they can remove the other lien holder lender from your policy. Lenders often require that you carry a minimum level of insurance so that if any damage were to occur, their collateral and investment the car would be sufficiently protected.

Once your car is paid in full, there are no longer lien holders and you may be able to contact your insurance company to see if it can reduce your coverage or offer you a better rate. Consider Saving the Extra Funds Another benefit of paying off your loan is that now you can use the money you put toward your car payment for other things. This is a great opportunity to save or invest, as you've already proven you can function without the extra cash. Of course, how you use this money will depend on your financial situation: You may have other debt you want to pay off or need to use the extra money for other necessities.

If you can afford to save this money each month, however, you could use it to build up general savings, put more toward your k retirement plan, add the extra funds to your child's college savings plan, pay more principal on your mortgage each month or set aside the extra funds for a vacation.When a car is purchased with a loan or other financing from a private party or financial institutionthe name of the lender is entered on the certificate of title as a lienholder. A lien is a legal right on some property granted to a creditor.

A lien serves to guarantee an underlying obligation, such as the repayment of a loan on a home or a car. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. If, however, the decision is made to sell a car before paying the lien holder in full, the owner has several options to remove the lienholder from the title and transfer ownership to the new buyer. In most cases, the easiest way to sell a vehicle with a lien is to do the transaction at an auto dealership, particularly if the car is going to be a trade-in.

In these transactions, dealers work directly with the lien holder listed on the title, which is usually a credit union or a bank, to facilitate the transfer of ownership. In this process, the dealer arranges for the full payment of the loan balance by using either the proceeds from the vehicle to be traded in or by adding the payoff amount to the loan being used to buy the new car.

The biggest disadvantage of going through a dealership to sell a car with a lien on the title is that the amount paid for trade-in vehicles is usually less than what can be realized by selling to a private party.

The process of selling to a private buyer, however, also requires some extra work by the seller. To start, the seller should contact the lender to determine the total amount required to pay off the loan, including any additional fees, to satisfy the debt and remove the lien holder from the title.

Executing the transaction at an office of the lender, if there is one in close proximity to both parties, is the fastest way to pay off the loan, remove the lien from the title and transfer ownership. This option is also the fastest way for the seller to collect proceeds from a sale involving a lien on the certificate of title after an agreement has been reached.

do i need a lien release to sell my car

In this process, either the buyer or the seller can transfer funds to the lender to pay off the balance of the loan, and documents can be executed to transfer ownership to the buyer, usually in one sitting. Regardless of the size of the lender, call ahead to ensure that there is someone in the local office to facilitate the transaction. This option provides an added level of assurance to the buyer through the avoidance of sending all proceeds to the seller, who must then transfer the funds to cover the loan to the lender.

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Depending on the laws specific to each state, the buyer may be able to send paperwork related to the sale and transfer instructions along with the payment to receive the cleared certificate of title directly from the lender. If this option is not available, the lender sends the cleared title to the seller. In either situation, both parties must sign the certificate of title to complete the sale and transfer ownership to the buyer.

The fee for using an escrow account adds an extra expense to the transaction and is usually based on the total amount of the vehicle sale. Because an escrow account protects the interests of both the seller and the buyer, the service fees are commonly split between parties.

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do i need a lien release to sell my car

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