How To Get A Lien Release
A lien is a legal notice of financial interest in a piece of property and is created as soon as you finance a car. Which means the lender holds the car’s title and is considered the legal owner until the loan is paid. There are some situations in which you’ll need to request a lien release from your lender. Here, we’ve laid out some steps on How To Get a Lien Release.
What Is A Lien Release?
A vehicle lien release is a document that declares that the lien on your vehicle title has been removed and you will be able to do what you’d like with your car. You are typically qualified for a vehicle lien release when the loan on the vehicle has been paid back to the lender. There are some special circumstances which allow you to qualify as well.
Different Types Of Lien Releases
- IRS Release: IRS lien releases are put in place when the IRS files a lien on someone’s assets. The release will not be granted until the debt is paid.
- Partial Release: A partial release is filed after most payments towards the total loan have been paid. The lien will remain on the asset, but it will be for a reduced amount to correspond to the payments that have already been made.
- Conditional Release: A conditional release will ensure that the lien release is dependent on the final payment clearing. If the final payment isn’t made successfully, then the lien will be reinstated.
- Unconditional Release: An unconditional release will remove the lien from the asset and it can not be reinstated once in place.
Who Provides A Lien Release?
A lien release is typically provided by the lien holder. Whether it be a company, financial institution or an individual contractor. If a financial institution is the lien holder, the lien release will usually be automatically filed and mailed when the final payment is made.If the lien holder is an individual contractor , after receiving payment for the completed work, the contractor will be required to file a release of lien. Here is a helpful list of lenders that you can use to help find your lien holder. www.finder.com
Getting A Lien Release
The Process of getting a lien release varies by state, so be sure to contact your local DMV to ensure you do all of the steps correctly.
- Find Your Lien Holder. – The lien holder of your title is the company that lent you your loan. You can find who this is by checking bank records to find who your payments went to. Make sure to take note of any address that they have listed for them. These can be found either on the lien holder website or through your state’s Secretary of State business database.
- Create Your Lien Release Letter.– You must send a lien release letter to request that your title is accredited to you. Be sure to include the year, make, model, VIN, lien holder information and your name. Make sure to have multiple copies of this letter and to send it to every address that you noted to guarantee it gets to the right person.
Letter Of Non-Interest. – If your lien holder has no interest in continuing to collect payments, you can request that they complete a letter of non-interest. This letter should also include the year, make, model, VIN, lien holder information and you name. Also, it should include a segment where they can sign away their interest.
- Mail Your Request. – Using the addresses you found, you should mail a copy to each of them through certified mail. Each one you send should comprise of your lien request, letter of non-interest and a labeled and stamped return envelope. You must send these documents by certified mail because most DMV’s require it. Sending it by certified mail also ensures that you will have a paper trail to prove your attempt in the instance that your lien holder lost the documents.
- Apply For A Clear Title. – Once your lien holder has released your title, you need to take the release letter or letter of non-interest to the DMV. Then they will begin processing it. You will have to pay all registration, tax and title transfer fees to receive a clear title.
What If My Lender Is Shut Down/Out Of Business?
If your lender has been shut down, it is most likely due to them not being licensed and in violation of of the state/federal law. It is mainly because they are not legally able to issue or collect on loans. If this happens, you lien may already have been released.
If your lender went out of business, they most likely have transferred your lien to another business. You can find where they transferred to by looking it up on your state’s Secretary of State business database. After you’ve found where it’s been transferred to, you can complete the lien release process as normal.
Court Ordered Release
If you have tried all possible options with no avail of getting your lien released. You can always opt for a court ordered title. A court-ordered title is granted by filing a court case in your local courthouse against the vehicle to have a judge permit you as the legal owner. In this process, You’ll have to explain how you’ve already tried to remove the lien using the other methods. Be sure to have all your documentation and proof of your request letters to ensure that you will be granted ownership.
Common Reasons For A Lien Release
There are a few reasons for getting a lien release, the first being to request for a new title. If you lose the title and need to have it replaced but still have a lien on it, you’ll have to get it released. You could also ask the lien holder to apply for a new one for you.
Another reason is if you are selling your car. If you decide to trade your car in to a dealership, you’ll have to request a release.
Lastly, the most popular reason for a lien release request is if you are wanting to Refinance Your Car. This is the most common due to buyers finding better and cheaper payments with less interest by refinancing. To find if your interest rates and payments would be better if you refinanced, you can use tools like an Auto Refinance Calculator to ensure you wouldn’t be increasing your overall payments. You don’t want to go through the process of releasing a lien if your payments are just going to be more costly in the long run.