Home » Articles » Titles » What’s A Lienholder?
Do you have a lien on your car title? If you do, you’ll need to get it released by your lienholder to obtain a clean title. What is a lienholder, who are they, and how do you contact them?
If you took out a loan to purchase a vehicle, the lienholder is the company that financed the purchase. They lent you the money to purchase the vehicle and they technically own the vehicle during the duration of the loan until it has been paid off in full.
The lienholder is also called a secured lender because they have a security interest in your vehicle. This means they are first in line to be repaid from any proceeds from selling your car or after an insurance claim has been settled on your behalf if there is an accident or total loss.
If you haven’t been making regular payments, the easiest way to tell if a car has a lienholder is to check the certificate of title. If there is an active lien, the lienholder will be listed above or next to your name on the title. If you don’t have the certificate of title, but the vehicle is in your name, you can contact the DMV to request this information. If the vehicle is not in your name, you may have trouble obtaining this information.
The duration of a lien, or a loan, on a car title, will vary based on the purchase agreements between the buyer and dealer. Some liens are active for as little as 2 years or as long as 7 years. After 10 years on a title record, many DMVs will purge lien records from their system to make room for new ones.
No, you cannot sell a car if it has a lienholder on the title, the lien must first be released by the lienholder. As long as the lienholder is listed on the title, they are considered the owner of the vehicle. You must either get a lien release, letter of non-interest, or get approval in writing from them before selling or trading the vehicle.
When a lien is satisfied by the borrower, the lienholder is supposed to pull the certificate of title, stamp it paid, then send it to the owner listed. Unfortunately, many times the vehicle owner is left to handle this task. To remove the lienholder from your title, first, make sure that your lien is eligible to be removed. Then, locate your lienholder and send them an official lien release request letter and letter of non-interest by certified mail. Once this is received, your lienholder will return the lien release letter or letter of non-interest and you will be able to remove the lienholder from the title at the DMV.
Your lienholder has the power to stop you from selling your car without their permission. When you’ve paid off your loan, it’s important to remove your lien information so that your car is clear to go.
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