Cash 1 Blog
Lien on Car Title: What It Is and How To Deal With It?
When you decide to buy or sell a car, the thought of getting rid of a lien on a car title might cross your mind. However, if you know how a lien works, how it impacts the buying and selling of a vehicle, and how to get a lien removed from a car title, things can get a lot easier.
A lien on a car title is not as complicated as it sounds. So let's first begin by understanding the term lien and answer some commonly asked questions relating to a lien on a car title in this blog post.
What Is A Lien On A Car Title?
The literal meaning of lien is exercising a legal right on an asset to another person until that person fully pays off the debt. In this case, the asset is your car title, and the lender becomes the lienholder.
Liens are broadly classified as voluntary or involuntary. For example, a car title lien is a voluntary lien where a borrower willingly uses their car title as collateral for a loan. On the other hand, involuntary liens are placed on the property regardless of the knowledge and consent of the owner. Examples include judgment liens and mechanic's liens.
Having a lien on your car title is not a negative thing. It simply means that you have borrowed money and handed over your car title to the lender as a promise to pay back the money within a particular time. Along with this, it's important to note that the laws governing liens on car titles may vary depending on where you live.
Why Is It Important To Know About Liens?
On the one hand, a lien protects the lenders' rights until the debt is repaid, and on the other hand, it also helps the borrowers gain access to a financing option without worrying about their credit score. However, the fact that you may lose your vehicle if you default on the loan makes it essential for you to learn about liens and state laws governing vehicle liens.
The lienholder's name appears on the car title until the borrower pays off the loan amount in full. Don't worry, as this doesn't represent that the lender is the owner of the vehicle. If you pay off the loan, the lien is released, and you can get the car's title back.
But if you stop making payments on the loan, the lienholder can repossess the vehicle and sell it to recoup the money they had lent you. Besides the right to repossess your car if you default on your loan, a lienholder can ask you to have full coverage insurance on your vehicle during your loan term.
Should You Buy A Car With A Lien?
When you plan to buy a used car, it becomes crucial for you to check for liens first. For example, if a lien is on a title in Arizona, it will appear in the space marked Lienholders. The seller's responsibility is to get the lien removed before selling the vehicle as per the Road Loans.
Here are other ways to find out if there's a lien on a car:
Check on state DMV websites:
If you have the car's vehicle identification number, you can easily perform a complete online lien search on your state DMV website. It will not just help you find the lien status but also tell you who the lienholder is.
Get a vehicle history report:
There are vehicle history providers like Carfax, National Motor Vehicle Title Information System (NMVTIS), Faxvin, Autocheck, etc. So you can get all the necessary information you need about the lien and the lienholder before making the purchase decision.
Can You Sell A Car With A Lien?
Selling your car with a lien on it is not different than buying. In both the cases, the loan needs to be paid off to get a clear title before making the sale. You can either choose to sell through an auto dealer or sell the car with a lien privately. In the former, you do not have to worry much, as the dealer will take care of all the work and deal with your lending company, whereas, in the latter case you will have to do everything on your own.
You need to find a buyer and disclose all pertinent information about the car, including the lien. Remember the lienholder has the first right over the sales proceeds. If you want to sell your car first or are unable to pay the loan, you will have to contact the lienholder and make some arrangements. In this case, if the buyer agrees to pay the remaining loan amount on your behalf then you easily move ahead for the car title transfer.
How Car Title Release Works?
Depending on your state, the process of removing the lienholder from the title and transferring ownership to you or the new buyer may vary. However, usually the process involves the following steps:
- Pay off the money you owe to the lienholder in full
- Fill out the form to have the lien-holder removed (this depends on the state you live in)
- Submit form, necessary documents, and original title to the DMV personally or online.
- Pay a nominal fee for lien release
- Get your new lien-free title
Putting A Lien On A Car For A Loan In Nevada And Arizona
When you do begin looking into loans against your car, it's important to understand that you need to be in possession of the title of your car in Nevada and be up to date with the payments on your car in Arizona.
The difference is that each state has its laws regarding small loans and car title loans, so the process is different in Arizona than Nevada. In some cases, you can get a loan based on the equity of your vehicle even if it is not paid off. Please see the CASH 1 Title Loans FAQ section for more information.
You should also know that you do not have to leave your car with us if/when you do take out a title loan. You can keep your vehicle and continue to use it throughout the course of the terms of your loan. Moreover, this lien does not get reported to any credit agency and only has legal ramifications if the loan is defaulted.
Can CASH 1 help when you have Lien on the car?
Yes, CASH 1 can help you get a loan based on the equity you have accrued in your currently financed vehicle. Equity on your car is the difference between what you owe on your vehicle and what it's worth. If your car is worth more than you owe, you can get up to $5,000 depending on the state you reside in and your ability to pay. You can also check out our blog on how to get a title loan with a lien to know about other loan options.
Harita Solanki is a passionate advocate for personal finance and believes in empowering individuals to take control of their financial lives.
Her expertise covers a wide range of personal finance topics, including budgeting, saving, credit, debt management, and retirement planning.
With over six years of dedicated experience in the finance industry, Harita has helped countless readers of CASH 1 Loans make informed decisions and achieve their financial goals.
As a dedicated writer, Harita has contributed to numerous financial publications, sharing her knowledge and insights to help readers navigate the complexities of personal finance.
Her writing style is approachable, concise, and tailored to the needs of everyday individuals looking to improve their financial well-being.