How do you get a lien released from a vehicle title? If you’ve paid off your vehicle loan, you’ll need to go through the lien release process to get a clean title in your name. In this article, we’ll break down the lien release process for a vehicle, including the necessary documents, what to expect from your lender, and how to get a lien release from a closed bank.
How to get a lien release on a vehicle title
To be eligible for a lien release, you must have paid off your auto loan in its entirety. Although there may be other reasons to obtain a vehicle lien release such as an old loan from a former owner, which we’ll discuss later in this article. However, just because you’ve paid off the loan doesn’t mean it’s been erased from the title records with the DMV. Here’s why.
When you make your final loan payment, your bank will mark your account as paid, stamp your title, and mail it to you with a lien release letter. It’s then up to you to take the stamped title and lien release letter to the DMV to exchange it for a clean title in your name.
However, in reality, this isn’t always the case and sometimes documents are not mailed or are missing. In this event, you’ll have to take some extra steps.
How to request a lien release letter
If you’ve paid off your auto loan but didn’t receive your title from your bank, you’ll need to request a lien release letter from them. This is a very common scenario. Some states require a specific form to request a lien release, while other states only require your letter to contain certain information.
To send a lien release request letter, locate your state’s official form or letter requirements. Complete the form as much as possible and send the form to your bank for them to complete their portion of the process. When doing this, send it by postal mail. Don’t attempt to do it over the phone or by email.
Once received, your lender has a timeframe specified by your state telling them how long they have to produce a lien release for you. Typically, this is around 30 days but can be as short as 3 days, as in the case of New York state. Check with your state’s laws to learn more about your specific scenario.
How to get a lien release from a closed bank
Now, this is where it can get tricky, but not impossible. If the bank is no longer in operation, you’ll still need to get a signed lien release. They’re not going to take your word for it at the DMV that the lien is satisfied without a signature. So what do you do?
When a bank or financial institution closes, they don’t just disappear and clear their books. They transfer their assets to another institution. So you’ll have to research who is now holding those assets. Were they bought out? Did they merge with another bank? Using your state’s Secretary of State database, research your lender to find where their assets went and who to contact. Once you’ve identified the new entity and registered agent(s), send your lien release request letter to all identified entities and agents. As the new owner of the assets, one of these parties will be authorized to sign off on the request.
Letter of non-interest
In the event that the bank was bought out, the loan is too old and no longer in the system, or the loan was from a prior owner, the current lender may not be comfortable signing off on the lien release. If this is the case, in addition to the lien release request letter send the bank a letter of non-interest. A letter of non-interest basically says that the financial institution isn’t saying the loan is paid, but that they’re not interested in pursuing it and that it’s okay to just take it off of the title records.
If you have a lien on your vehicle, but you’ve paid off your loan, the main takeaway is that it’s important to get the lien released as soon as possible. Keeping the lien on your vehicle will inhibit your ability to sell or trade in your vehicle and until the lender is taken off of the title, they’re the primary owner. If it’s your car, you deserve a clean title in your name.