lien on a car

What Is a Lien On a Car?

Do you know there is a lien on your vehicle? Just because of less awareness people do not know much about this fact. Moreover, a lien title car or car lien can affect the insurance coverage amount. The requirement is to get everything in place if you want to sell the vehicle.

For instance, if you are selling the vehicle privately then you must clear the loan on your vehicle for removing the lien from the car title so that title can transfer to the purchaser.

This blog guide will educate you regarding the concept of a lien on the car, who holds a lien on the vehicle, how to purchase or sell the vehicle with a lien, and where you can discover the necessary details.

Defining Lien

The lien is the claim that another person known as the lienholder– is the lender and offers a loan on the particular vehicle. In addition, if you are purchasing a vehicle having a pending title loan, the vehicle will have a lien on it. In such circumstances, the lender will hold the title for the vehicle and will remove it when the loan gets cleared.

The lien lets the lender repossess the vehicle if the loan is not cleared, no matter who presently has the keys. Besides, this makes it crucial to ensure that there is no lien or pending amount against the vehicle.

Recommended reading: Most Common Misconceptions of a Car Title Loan

What are the ways to check if the vehicle has a lien?

Who holds a lien on a car?

The auto title loan lender is the lienholder on the vehicle and may hold the vehicle title. Considering the state regulations, the lien holder will file the lien with the state’s transportation authority of motor vehicles. Once the loan gets clear, the lien holder will send a lien release document to the department so that the title of the vehicle can get updated and the transfer process can be completed.

Being the official vehicle owner, the lienholder has numerous rights. Initially, they can repossess the vehicle if you default on the loan. To protect their interest, lien holders will urge you to have a few types of auto insurance coverage- specifically comprehensive and collision coverage. This must be at work until you not clear the taken loan.

In a few states, the mechanic can also place a lien on the vehicle. While some states make mechanic’s lien applicable, they can place a lien making lien title car while completing their work and not receiving the remuneration within the particular time frame.

How can I discover lien details?

What is a lien on the car? How do I know whether it is a lien title car? Let us answer the questions for you. As mentioned above a lien is the claim by the lien holder who has offered a loan on the particular vehicle and has the ownership until the loan is not gets cleared.

Moving ahead, if you want to purchase a vehicle from a private seller, you must check the lien status. There are some steps you can follow to discover details:

Verify with the state’s transportation agency

Few state DMV websites let you finish the online lien searches by using the car’s vehicle identification number. The 17-digit number is placed at the lower left side of the vehicle’s windshield, within the hood, on the engine, or at the driver’s door side. Moreover, it is present on the vehicle’s registration certificate and insurance documents

If you have, check the title

In case, it is a lien title car, the title will include the lien holder’s name.

Getting the vehicle history details

The vehicle history report will offer a lien history alongside necessary information such as odometer readings, past owners, or heavy damage experienced. All this information is crucial and helps in making the right purchase. Vehicle history report providers involve the national motor vehicle title information system.

What are the ways to purchase a vehicle with a lien?

Buying a car with a lien is not a smart decision and not knowing about it can land you in a tough situation. Moreover, it is easy to discover the lien associated with the vehicle you want to buy from the private seller. Auto title loans have gained immense popularity and increased the chances that someone is still paying the pending loan.

Communicate with everybody present in the Transaction

This is crucial to have transparent communication with the lender, seller, and seller’s lender. There are numerous ways you can manage while purchasing a vehicle with a lien on it from a private seller. Besides, to find the best alternative for every individual is to talk with everyone involved in the transaction.

Does the seller have cleared the taken loan?

The easy way to purchase a used vehicle with a lien is to ensure the seller has cleared the taken loan. In addition, if they have cash savings they can clear the loan or can choose a personal loan for clearing the previous loan. They can use the money from the car sale to clear the new loan. This eliminates the lien from the title and makes it easy for you.

The lender has transferred the title

The earlier you know that you need a used car loan, the best way is to visit the lender and request them what their rules are in case the vehicle you want to purchase has a lien on it. Many times, the lender will work directly with the seller’s lender for finishing the transaction and clear the complications present around.

In this situation, the lender will pay the seller or seller’s lender. In addition, if the seller’s lender is paid, then extra money beyond what they want to pay for the loan will return to the seller. If the selling price is lower than what the seller owes then the seller has to make payments until the loan is not repaid, even if they do not own the vehicle.

Recommended reading: Using Your Car As Collateral For a Loan