If you plan to sell your car after receiving the lien release letter from your lender, you may wonder if you can sell the car with the lien release letter instead of going through the title process. After all, the loan is paid off, and you have the lien release letter from your lender to prove it. However, once you receive the lien release letter, there are several more steps to take to properly record the release of the lien with the DMV and to avoid title jumping.
Lien release letter vs. car title
The lien release letter states that the loan that was issued using the vehicle as collateral has been paid in full and that the lender (lienholder) no longer has an interest in the vehicle. The lien release letter is not the same as the vehicle title. The vehicle title certifies the ownership of the vehicle. While the lien is active, the lienholder has the first right to the vehicle title if the loan is unpaid. Therefore, while the lien is active, they are the primary owner of the vehicle. Once the lien release letter has been received, you can exchange it with the DMV for a new title in your name, where you are the primary owner of the vehicle. This is not an automatic process and will not be updated unless you go through the steps with the DMV.
Why can’t you sell a car with just a lien release letter?
Since the lien release is not automatically recorded in the DMV system, the lender will still be listed as the primary owner until you present the letter and remove the lien. By selling a car with just a lien release letter, you’re not getting the title properly assigned to your name, which means you’re selling a car that isn’t yours and that you’re jumping titles. A jumped title is a title that is not properly signed over to the authorized party before being signed to another party. Essentially, one or more owners are skipped in the titling process.
How to sell a car after receiving a lien release letter
Once you’ve received the lien release letter from your lender, take it immediately to the DMV to exchange it for a title in your name. Before heading to the DMV, make sure you have all of the required documents for the lien release process in your state. Once you’ve received a new title in your name, you can assign new ownership of the vehicle on the back of the certificate.
The most important thing to remember is that to sell your car with a lien release letter; you must first trade the lien release letter in for a new title. By doing so, you can avoid title-jumping penalties and fines.