What is a Lien?
Simply put, a title that reflects a lien indicates that the lien holder is still at least part owner of the car. Not having a clear title can cause serious difficulties when it comes time to sell the car so getting the lien removed should be done sooner rather than later.
Generally, when the last payment is made on a car loan, the lender will provide the new owner with a clear title, one that only mentions the name of the buyer. However, sometimes because of careless processing, the lender's name may remain on the title. At this point, it is impossible to sell the car with the lien still existing. The situation becomes even more complicated if the title is somehow lost. Now a replacement title must be generated, and this will not be possible without involving the lender. In a worst-case scenario, the lender may have gone out of business. In this case, the car owner is faced with the task of determining who bought the assets of the original lender and then enlisting their help to get the lien removed.
Removing the Lien From a Car Title
If you have examined and your title and have determined that the name of the lien holder is present, you should work as quickly as possible to have the lien removed. Delays in the process could lead to the problems listed above. To remove the lien, you will have to provide evidence that the car has been paid in full. In most cases, once the last payment is made the lender will send a letter indicating that the loan is complete as well as a copy of the title. When you take the title to the DMV for them to process a clear version, sometimes this letter will be sufficient to have the lien removed. In other cases, additional paperwork must be provided. Usually, this paperwork includes a state-mandated form of some type. Check with the DMV in your state to see if it will be necessary for you to complete this additional step.
Once your paperwork is in order, you will need to take a trip to your local DMV office. You can save yourself lots of time and frustration if you call in advance to see if you have the possibility of making an appointment. This step is especially important as some offices only have a limited number of representatives assigned to deal with car title issues. Even if this is not the case, and appointment will save you the time it will cost standing in with the rest of the general license traffic.
Once you have produced all the documents necessary to satisfy the DMV requirements, you will be issued your new clean title. Be advised that if the original paper title has been inadvertently misplaced or destroyed the process will take much longer. It is also advisable to contact your insurance company once the clear title has been obtained. It may be possible for you to change or reduce your coverage once you have cleared the lien and officially own the car in full.