If you’ve paid off your vehicle loan, how do you obtain a new clean title from your lienholder?
When you borrow money to buy a car and use the car as collateral, your creditor places a lien on the vehicle. The lienholder’s name appears on the title along with the owner of the vehicle. If you’ve ever financed a vehicle, you will have a lienholder. The lienholder is listed on your vehicle title as the owner along with your name because they have lent you the money to purchase the vehicle and the debt has not yet been paid back. Once the debt is paid back in full, the lienholder is required to stamp your title as paid and mail it to you.
Unfortunately, not all lienholders are made the same. Frequently, vehicle owners will have to take the title process into their own hands.
How do you get a lien release from a lienholder?
The easiest way to release a lien on your vehicle title is to contact the lienholder directly and request that they send you a written lien release. The lienholder is the only authorized agent to release the lien from the title. If the lienholder doesn’t reply within twenty-four hours of your initial request, try contacting them via mail.
Using online sources and your state Secretary of State database, research the lienholder’s primary address along with any additional addresses you may find (principal address, mailing address, other locations, etc.). Using certified USPS mail to the official addresses, send your lienholder your state’s lien release request form along with a letter of non-interest. If your lienholder is no longer interested in pursuing the lien against the vehicle, a letter of non-interest is sufficient from the lienholder in absence of a lien release letter.
Before sending the forms, ensure that your portions are completed and notarized if needed. Sending the forms completed may result in a higher likelihood of a response.
Title holding states vs. non-title holding states
A title holding state means that this particular state requires that the lienholder hold the title until the loan is paid off. Most states in the US are title-holding states. Non-title holding states will send the vehicle title with the owner’s name and lienholder’s name directly to the vehicle owner to hold until the loan is paid off.
There are currently nine non-title holding states. They are:
- New York
- South Dakota
In order to obtain a clear car title, you must first obtain a lien release or letter of non-interest from your lienholder or lender. The steps above are a general overview, the processes for each state may vary slightly depending on the jurisdiction and the lienholder. When contacting your lienholder for a vehicle lien release, make sure that you are completing the forms correctly. In most states, the submission of a fraudulent lien release is considered a felony.