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Lien Titles and Vehicle Lien Release Explained

Do you have a lien on your car title or need to obtain a vehicle lien release? The terms lien title and vehicle lien release may seem to have negative connotations, but a lien on a vehicle title is actually extremely common. If you’ve purchased a vehicle with the assistance of a loan from a lender, that lender places a lien on your title until the loan has been paid off in its entirety. A lien is a claim on a property for the security of payment. When a lender loans a borrower (you) money to purchase a vehicle, they want to make sure that they are paid back plus interest. Your lender, also known as your lienholder, will remain printed on the front of your vehicle title until the loan is paid off. A lien on a vehicle title is a cloud on the title that places a hold on the ownership. 

Most states are titling states, meaning that the lienholder will hold the title until the loan is paid off. On the other hand, there are a handful of states that are non-title holding states, meaning the title is sent to the vehicle owner with the lienholder and the owner holds the title. Once the loan is paid off on your vehicle, your lender will stamp the title as paid and mail it off to you. However, just because the loan has been paid doesn’t mean that the lender has released the lien. Oftentimes, it is up to you to go through the lien release process and notify the DMV of the satisfied payment.

How to release a vehicle lien from DMV records

The easiest way to release a lien from your vehicle title is to contact your lienholder directly and request they email or fax a lien release to you. Your lienholder is the only authorized agent to release the lien from the title. If your lienholder doesn’t reply within 24 hours of your initial request, try contacting them via mail. Research the address of your lienholder along with any other address locations you can find. By certified mail, send your lienholder your state’s lien release request form along with a letter of non-interest. A letter of non-interest is a document that states the lienholder no longer has any interest in pursuing the unpaid loan amount on the vehicle and can be sufficient to release the lien. Make sure to do most of the work before sending out the lien release request and letter of non-interest. Make sure that all portions of the forms are completed in their entirety and notarized if needed. Your lienholder is more likely to return the forms quickly and without issue, if you provide them with the already completed forms only in need of a signature. We recommend including a return envelope with a stamp for added convenience.

When completing a lien release request, make sure that all of the information is correct. Submission of a fraudulent lien release is a felony in most states. For your peace of mind, we can help to professionally prepare your lien release request and contact your lienholder.

Vehicle Lien Release Frequently Asked Questions

Do I still need to obtain a lien release if my loan was charged off?

If your loan was charged off, meaning the lender wrote off the remainder of your loan payment, this takes the loan out of the financial system. The lender can no longer use it as an asset and no longer have rights to the remaining balance. However, this doesn’t take the lienholder off of the title. If your loan was charged off, you still need to obtain a lien release from your lender.

What do I do if I bought a car with a lien on the title?

If you’ve purchased a vehicle with a lien, you should mitigate the lien with the lender. Lien mitigation is when the new owner disputes the lien with the lender. The new owner asks the lender to remove it because they were not the original borrower and they have no obligations to continue paying a loan that is not theirs.

Which states are non-title holding?

Arizona, Kentucky, Maryland, Michigan, Minnesota, New York, Oklahoma, South Dakota, and Wisconsin

 

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