If your car loan has been approved, you may encounter the term lien. However, the chances that you’ll understand what it means may not be good.
A lien on a vehicle is just like a protection for the lenders and any other party. When you take a car loan, a lien 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, the loan company might repossess the vehicle that is used as collateral.
Since the loan is secured against the car, the 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 a lien 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 car lien will be released to the borrower. The procedure for this can differ based on states, but, normally, the lien holder will send a document for release of the car to the state DMV, 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, a 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 Vehicle
- Check the car title for information about the previous and current 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.
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 TFC Title Loan, 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 title loan for different credit situations and auto loan calculators to help you make a good decision.
TFC Title Loan accepts title loan application from people with different credit score. Whether they are buying a car from a private party or car dealers, we offers quick loan process. If your loan is approved, you can shop for a vehicle since you know that your financing is covered.
Do you need refinancing for a car? Then you should consider getting a car loan online from TFC Title Loan.