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28 Jun 2019   /   0 comments

What is a Lien on a Car Title?

Paul

What is a Lien on a Car Title?TFC Title Loans has countless customers that ask “what is a lien on a car title?” We get asked this so often because they continually hear us talking about putting a lien on their title in order to complete the title loan process. A lien is a legal right that a lender has on a property that is used as collateral by the borrower.

A lien can be very generally defined as the legal right that a lender has on a piece of property used as collateral which someone else owns. This legal right may include the ability to take possession of the property used as collateral if the borrower defaults or breaches any of the agreement signed.

What is a Lien on a Car Title?

If you are applying for a car financing or car title loan, a lien will be placed on your car title just to form a kind of security the lender can hold on to in case you decide not to pay or delay payment. To avoid the risk of financial loss, the lender will maintain the lien against the vehicle until the car itself or the personal loan is completely paid off. If the loan defaults, the lender can sell the collateral to recoup any losses.

A car lien remains on the title until the debt has been repaid. The lender will issue a lien release after the final payment is made. When purchasing through a dealer, the dealer typically files a lien on your behalf. If you already have a title and need to add a lien, you’ll need to follow the guidelines to file a lien issued through and by your state of residency.

What is a Lien on a Car Title Application

Lien Ownership

When the lender has your title, you still get to drive your car; it is only the title that we keep for the duration of the loan. Once you have repaid the loan in full, we will sign the title back over to you so as to signify that we have released the lien we placed on your car. We then mail the title back to you unless you prefer to pick it up from us in person. Once you have your vehicle’s title back from us, it will be free and clear with absolutely no lien on it whatsoever.

What is a Lienholder?

What is a Lienholder?Lienholders are the lender that owns your car or other property. Until the loan is paid back in full, they retain full ownership over that property. Basically, they have a fully legal claim to the vehicle because they issued you the finances to purchase the car.

A lienholder is someone who’s has leased a car to you with an insurable interest, or, given you money to purchase the vehicle. The lien holder is typically a bank or some sort of financial firm. When insuring your car, the lien holder will usually be included in your insurance policy. When financing a vehicle, the lienholder’s name will appear and remain on your car’s title and insurance policy until the loan is paid off.

Read more about lienholders from https://www.allstate.com/tr/car-insurance/learning-about-liens.aspx.

Can a Lienholder Affect the Car Title?

When you borrow money for a car, the lienholder will keep the title. The lender name will appear on the car title, and this is because it’s proof of ownership in relation to the vehicle. This ensures you can’t sell the vehicle until your loan is paid off in it’s entirety.

Once you repay the loan, the lienholder will sign the title over to you. The process can take up to or a little longer than 5 full business days. Once paid off, you can then go to the DMV and obtain lien filing paperwork to receive a title directly in your name. At that point, the car is officially yours to keep, drive, or sell as you please!

How to Put a Lien on a Car Title

What is a Lien on a Car Title?Already have a car title and want to add a lien? You’ll need to follow and adhere to the lien filing guidelines issued by your state. Preferably, your state of residency! Otherwise, placing a lien on a car out-of-state can, at times, be tricky.

Read more about liens from https://en.wikipedia.org/wiki/Lien.

Filling out the Lien paperwork

Obtaining a title application is as easy as going to your local DMV and filling out the appropriate lien paperwork. You’ll want to fill out your personal information and vehicle information. Also, you’ll need to fill out lien holder information which includes the address and lien code. You then submit your application to the clerk and pay the appropriate fees to add a lien holder.

Fees & Documents For Lien Holders

Fees vary by state. It’s suggested you contact your local DMV to identify the fees you’ll need to pay for the lien filing. You may need to show loan documents for verification. Once filed and the information has been verified, the DMV will issue a new title.

Depending on the state you’re living in, the car title may be mailed to the lender as a secured first party. In turn, you’ll receive a copy in the mail.

Be sure you maintain the copy your receive as it is crucial to your car for proof of ownership. With it, you can continue to drive or sell your car with title as needed.

It should be noted – in some states, the owner of the vehicle receives the title and the lender receives a lien notice.

Items you need

  • Car Title

  • Lien Holder Information

  • Loan Documents

  • Title Application

  • Fee (contact your local DMV to inquire about any lien application fees)

Ability to Pay

what is a lien on a car title After the application and approval process is through, we will sit down with you to finalize your loan terms. We always customize our loan terms to our customer’s specific and unique life circumstances. This is to ensure they will be able to repay the loan. It is after those papers are signed that we place a lien on your vehicle’s title. We then become the official lienholders and keep your title in our possession until the loan has been fully repaid.

Lien Release, Mechanic Lien & Payoff Tips

  • Once you pay off the loan, the auto lender will mail a lien release with the title to you per state regulations. You’ll then have to take the car title along with the lien release to your local DMV and request a lien-free title to be issued.
  • Individuals can file a mechanic lien for non-payment of debts. This include services or a loan. In some states, a mechanic’s lien will need to be filed directly in court.

Understanding Your Finances Before Making Huge Financial Decisions

What is a Lienholder?Many people don’t know what that is but we believe it is our responsibility to inform you about every aspect of what we do before you even decide to work with us. Our main goal is for you to come out of this experience with better financial footing than you had before.

We make it a priority that you understand how the car title loan process works so that you are able to make an informed decision that will benefit your finances.

Read these 6 tips for getting the best deal on a car title loan.

 

About TFC Title Loans

If you are looking for a title loan close to you, we are here to help you. All you have to do is apply online or call 844-242-3543.

Ever since we opened our doors in 1994, TFC Title Loans made our customers the company’s number one priority. Because of this, we have created a wealth of resources! Why? So that you can better understand what we do. Why we do it. And become more knowledgeable yourself about financial matters to create a bright future. If you’re still wondering, “what is a lien on a car title?”, contact us today!

Read more about title loans from https://en.wikipedia.org/wiki/Title_loan.

“What is a Lien on a Car Title” is brought to you by TFC Texas.

Frequently Asked Questions
What is a Lien on a Car Title?

A lien on a vehicle title is a form of security interest. It's granted over an item, your car in this case, to secure the payment of the title loan issued by the lender.

When I Get a Title Loan, is a Lien Placed on my Vehicle?

Yes. When a potential borrower applies for and receives a car title loan, a temporary lien will be placed on his/her vehicle until the entire title loan has been paid in full.

How Do I Remove a Lien From My Vehicle When I Have a Title Loan?

You can have the lien removed from your vehicle when your title loan has been paid off in its entirety.

How Much Cash Can i Get?

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