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What Happens if You Don’t Get a Lien Release Letter from Your Lender?

  • 3 min read

Are you having trouble getting a lien release letter from your lender? When a vehicle is financed, the lender can often be delayed in producing the official lien release letter needed to get a clean title with the DMV. This letter is an important document that indicates your lender no longer has a legal claim on the vehicle and that you are the owner. So, what happens if your lender doesn’t provide a lien release letter for your vehicle?

The main issue is if you don’t receive a lien release letter from your lender, it means that the lender still has the first legal claim to the vehicle. As long as the lender is listed on the title, they are the vehicle’s primary owner(s) until the loan is paid off in full or discharged appropriately.

Secondly, you may be unable to sell or transfer the vehicle’s ownership without the lien release letter. The lien release letter proves that the lender has released their legal claim on the vehicle, allowing you to transfer ownership to someone else. If you cannot provide this proof, the buyer may not want to purchase the vehicle, and you may be stuck with it. In fact, it’s illegal to sell a vehicle with a lien on it without getting that lien released first. 

Additionally, not having a lien release letter can cause problems if you get into an accident or if the vehicle is stolen. In these situations, insurance companies will need to know if there are any outstanding liens on the vehicle. If there is an outstanding lien, the insurance payout may go directly to the lender, leaving you without any compensation for the loss of the vehicle you’ve already paid off.

Therefore, if you do not receive a lien release letter from your lender, it’s important to follow up with them and request it. You should try to contact them in writing by certified mail as opposed to a phone call or sending an email. Attempt to send your request to as many addresses for the lender as possible; typically, we’ve found that sending to 3-4 different addresses often results in a response. If they are unresponsive or refuse to provide the letter, you may need to seek assistance from the court in your county.

In conclusion, a lien release letter is a crucial document that you need to have if you want to transfer ownership of your vehicle or if you want to ensure that you receive insurance compensation in the event of an accident or theft. If you do not receive a lien release letter from your lender, you need to take action to get it, or else you may face some serious problems in the future. For assistance in obtaining your lien release letter, is here to help.