An automobile lienholder is typically the financial institution that you’ve borrowed from to finance a car. We go over what you can do to remove the lien if you need to sell the vehicle.
Your lienholder is the lender that gave you a loan to purchase the car. If you’re not sure who the lienholder is, it could be as easy as pulling out the vehicle’s title. Car titles have the owner’s name and the lienholder’s information listed on it.
If you don’t have the title, you may be in a title-holding state. The majority of states are, which means the state holds the title until the loan is paid in full.
If you want to know who the lienholder is but you don’t have the title, you can contact your local DMV or Secretary of State (SOS) and give them your vehicle’s identification number (VIN), and the make and model.
Your VIN is typically located on the driver’s side dashboard where it meets the windshield, where it’s etched on a metal plate. It’s a unique sequence that only your car has. In some states, you can also request a replacement title from the DMV or SOS, for a fee.
The lien can be removed once the loan is paid off, and you can’t sell or transfer ownership to anyone until the lien is removed. This is because the lienholder, like you, has ownership rights to the vehicle. Until the loan is paid off, the car is still the lender’s property because they loaned you the funds to purchase the vehicle. This also means that if you default on the loan, or miss any payments, the lienholder can repossess the car.
Once you’ve paid off your vehicle, the lien gets removed and you get a release of lien letter from the lender. Once you have the release, you’re in the clear! You can either get a new title with the lienholder removed or keep the release of lien letter with the car’s title.
If you haven’t paid off your auto loan and you want to trade in a vehicle or sell it, you need to request a payoff amount from the lender. This amount contains your remaining balance on the loan, and usually 10 days of additional interest (to give the lender time to receive the payoff). Once you have the payoff, either you or the buyer can write a check to the lender so the lien can be released. Once the lien is removed, car ownership can be transferred.
Now that you know how to find out who your lienholder is, you can work to successfully sell or trade in your vehicle.
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