If your car loan has been approved, you may encounter the term auto lien or car lien on a vehicle. However, the chances that you’ll understand what it means may not be good.
Lien on a Car
A lien on a car is just like a protection for the lenders and any other party. When you take an auto loan, a lien on a car will be created and it’s the legal right of the lender to repossess the car until the loan is paid back.
This means if you failed to repay the loan. Thus, the loan company might repossess the vehicle that is used as collateral.
Since the loan is secured against the car, the auto lien holder may insist that the asset is secured. Therefore, the borrower is required to take a comprehensive and collision insurance coverage.
With a car loan, the lending company normally files for liens with the state department of motor vehicles (DMV), this provides public records. In most cases, apart from being the lien holder, the lender may also hold the title of the car.
When the loan is paid, the lien on a car will be released to the borrower. The procedure for this can differ based on states. But normally, the holder of these liens will send a document for release of the car to the state DMV. That’s where the title is updated. You may also get a copy of the lien released document from the lender. This now shows that you own the car.
When selling or buying a car, an auto lien is what you need to take into consideration in order to ensure there are no surprises after the transaction. Ensure you keep these tips in mind!
Ways of Checking a Lien on a Car
- Check the car title for information about the previous and current car lien. You should know that information on the titles may vary.
- Asking the seller for a copy of the lien release document can also help.
- Make use of the state DMV information. There may a service online which enables you to run a car check with the vehicle identification number (VIN) from the model you are interested in. You can also visit your state DMV office.
Vital Tips to Sell Your Vehicle With a Car Lien
It is possible to sell with a lien on a car as long as you pay off the loan for the liens to be lifted and then you can transfer the title. You can pay off the balance on a loan by finding out how much you owe on the loan from your lender and paying what you owe on the loan in one single payment or you can add you can add to your usual payment amount over a couple of months in order to pay the principal faster.
You can also go through the route of selling your car to a dealership or to another person while sorting out the payoff and the car lien at the same time. If you sell to a dealership they can help with sorting the paper work but if you seal to a private party, you might be responsible for sorting the paperwork.
Considering Buying a Car? Try Financing Online
If you want to change your car and you need financing for a used or new car, consider Car Loans of America, the direct lending online platform servicing the whole of the USA.
We provide resources and information that can assist you in the car buying process. We can help you with articles about loans for different credit situations. And, we have auto loan calculators to help you make a good decision. If you’re seeking a pre approved car loan or bad credit car loans, we’ll do all we can to help you finance the vehicle of your dreams.
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