What is a Lien on a Car Title?

Daniel Joelson

Daniel Joelson

Total Posts: 346

Published Date: February 9, 2024

Daniel Joelson has been in the consumer finance space since 1994, he has helped to develop underwriting manuals for the financial sector. With a vast amount of Knowledge in consumer finance, he has been writing articles for all types of loans. With his knowledge, he is able to help many people to answer different financial problems.

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 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 that someone else owns. This legal right may include the ability to take possession of the property used as equity if the borrower defaults or breaches any of the agreements signed.

What is a Lien on a Car Title?

If you are applying for car financing or a 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 auto 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 car loan. Once you have repaid the loan in full, we will sign the title back over to you to signify that we have released the lien title 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.

lien title
what is a lien on a title

What is a Lien holder?

Lien holders 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. They have a fully legal claim to the vehicle because they issued you the finances to purchase the car.

A lien holder is someone who 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 lien holder’s name will appear and remain on your car’s title and insurance policy until the loan is paid off.

Can a Lien holder Affect the Car Title?

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

Once you repay the loan, the lien holder 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 get 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

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

Filling out the Lien paperwork

Obtaining a title application is as easy as going to your local DMV and filling out the appropriate lien title paperwork. You will want to fill out your personal information and vehicle information. You need to fill out the 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 is suggested you contact your local DMV to identify the fees you will 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 are living in, the car title may be mailed to the lender as a secured first party. In turn, you will 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 a title as needed.

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

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 will 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 includes services or a loan. In some states, a mechanic’s lien will need to be filed directly in court.

This article was brought to you by TFC Title Loans, we try to bring to you the most informative information. If you are interested in getting a title loan local to you, we are able to help you with our large referral network ,we have options for you, if you are looking to get Seattle title loans , we are here for you..

We will help you to get the most money by using the equity that you have in your vehicle, the application is fast and we can provide you with same-day funding.

All of our referral partners are in compliance with the CFPB. We will help you to get the money that you need from a trusted and reliable title lender.

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

If you are looking for a title loan with no vehicle inspection, we are here to help you. All you have to do is apply online or call 844-242-3543.

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DISCLAIMER: As our policy to make sure you know what we do and what are our limitations, we offer you these disclaimers. We are NOT A LENDER and we do not make short term cash loans or credit decisions. We are a referral service and work only with licensed lenders/brokers.

We may act as the broker for the loan and may not be the direct lender. Loan proceeds are intended primarily for personal, family and household purposes. We do not offer or service student loans.

*Loan amounts by the lenders vary based on your vehicle and your ability to repay the loan.

*Since we do not lend money directly we cannot offer you a solicitation for a loan, except in the state of California. In all other serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans and Auto Title Loans are not available in all states and all areas.

*Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan.

*All lenders are responsible for their own interest rates and payment terms. TFC Title Loans has no control over these rates or payments. Use of the work competitive or reasonable does not mean affordable and borrowers should use their own discretion when working directly with the lender.

*The amount of people who applied for a loan and we helped and those who received a loan is not the same. We cannot guarantee we will find a lender who will fund you.Just because you give us information on this web site, in no way do we guarantee you will be approved for a car title loan or any other type of loan. Not all lenders can provide loan amounts you may see on this web site because loan amounts are limited by state law and/or the lender. Some lenders may require you to use a GPS locator device on your car, active all the time. They may or may not pay for this or charge you for this. This is up to the lender and we have no control over this policy of the lender. Typically larger loans or higher risk loans use a GPS.

*In some circumstances faxing may be required. Use of your cell phone to receive updates is optional.

*Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

*Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

*Trading Financial Credit, LLC dba TFC Title Loans, Car Title Loans California, Dineromax. If you are using a screen reader and are having problems using this website, please give us a call at 1-844-242-3543 for immediate assistance.

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