Are you trying to remove a lien from your car title? A lien on a car title means that there is a loan out for the vehicle and it has not been satisfied or discharged. A lien on your title also impacts your ownership of the vehicle, which can be frustrating and confusing. There are several ways to get rid of that pesky lien on your title, here are the top 5 ways plus a bonus method to remove a lien from a car title.
#1: Lien release letter
The easiest way to remove a lien from a car title is to send a lien release letter to your lender requesting that the lien be removed. Typically, the lender is supposed to stamp and send you your certificate of title once your loan is satisfied, but we find that often this is not the case.
When sending a lien release letter, make sure to also include a pre-stamped envelope for the lender to send back the documents. The more paperwork you can complete for your lender in advance, the more likely you are to quickly get your lien release letter returned. If your loan is satisfied and you were the original borrower, this is the easiest way to remove a lien from a car title. If you were not the original borrower, you may have problems getting the lien released from the lender.
#2: Letter of non-interest
If your loan is old, your lender may no longer have interest in the vehicle. Similarly, sometimes when the loan is too old, the lender will discharge the loan from their system. In this event, a lien release letter is not applicable since they are not interested in the vehicle. In this case, send the lender a letter of non-interest where they will state they are no longer interested in collecting on the loan and that it is no longer in existence.
The problem is, that you may not know if your loan is too old or if it has already been discharged. We recommend, when sending a letter of non-interest, to also include a lien release letter just in case the lien records still exist.
#3: The lender was shut down
Most people aren’t aware of this, but many lenders over the recent years have been shut down because they are not legally eligible to issue or collect loans. This occurs when your lender is unlicensed or otherwise in violation of state and/or federal law. Unlicensed loan companies are a huge risk to vehicle buyers. According to this 2016 article from The Morning Call, the author states that there were 535 Pennsylvania residents whose vehicles were liened by an unlicensed lender. In this case, all remaining loan charges for these vehicles are prohibited and repossessions are also prohibited.
If your lender was shut down due to improper licensing or unlicensed practice, your lien may have already been discharged.
#4: The lender went out of business
Just like other types of businesses, lenders go out of business all of the time for all kinds of reasons, not necessarily because they’ve been shut down by the government. If you need to remove a lien from a car title but your lender is no longer in business, first search for the lender in your state’s Secretary of State database. From the documents in the SOS database, you’ll be able to find out if the lender has simply moved or has transferred their customers to another business.
Once you have addresses for the lender or new lender, send them a lien release letter and a letter of non-interest.
#5: Court-ordered title
A court-ordered title is a last-resort option if all other methods to remove your car title lien have failed. A court-ordered title is obtained by filing a court case in your local county courthouse against the vehicle to have a judge declare you the legal owner by court order. In this process, be prepared to explain how you’ve already tried to remove the lien using the other proper methods. If you’re using this process, make sure your ducks are in a row.
If granted the court-ordered title, take the court order to the DMV and present it to them to be issued a new clean title in your name.
BONUS: Your lien may have already been discharged by your state.
If you’ve paid off your lien and it’s just been sitting in the DMV records for 5-10+ years, there’s a good chance that the DMV in your state has already erased the records of the lien. After a certain amount of years in the DMV database, the DMV will purge their old records to make room for new ones. Auto loans typically have a shorter life than 10 years, so after this amount of time with no changes, there’s no benefit for the DMV to hold onto this record.
A car title lien can be removed by using any one of these methods. Remember, having a lien on your title significantly impacts what you are able to do with the vehicle. If it’s your car, you deserve a clean title in your name.