Transferring A Car Title (What You Need To Know)

Buying Or Selling A Car With A Lien On The Title

If you are going to be buying or selling a vehicle in 2018 you are going to want to know as much as possible about Liens and how they can affect your ability to transfer a title.  I myself was once the victim of not properly researching liens for a vehicle I was buying, and that simple lapse in judgment cost the business $5000 and a month of phone calls and paperwork.  So that you can avoid my mistake, I will answer some of the most commonly asked questions about Title Liens paired with a few tips from my own time as a small independent dealer.  As always, there will be a comment section below and I encourage you to pose any questions not answered in the content below.

What Does A Lien On A Title Mean?

A “Lien Title” (Typically a title for a car) is a title that has had a lien or levy applied to it by a 3rd party using a car or truck as collateral (Usually for a loan or unpaid debt).  In these cases, the lien holder is often the party who actually holds the physical title until such time that the debt or claim has been satisfied.

Can You Sell A Car That Has A Lien On It?

Any Vehicle that has an active lien against its title cannot be officially sold, period!  To sell a car with a lien on its title the lien must be released by the lienholder first.  This typically involves paying off (In full) any outstanding debts for which the vehicle was used as collateral.  Is it illegal to try and sell a car that has a lien?  Well, if you make a sale that is contingent upon you paying off the balance of whatever debt you owe the lienholder, then no.  But, if you actually complete the sale of a car with no intent on satisfying the lien holder then technically you have sold a stolen vehicle, which is obviously a criminal offense.

How Do I Get A Lien Removed From A Car Title?

This is fairly standard for all states, but the first step will be to contact the lien holder and request what is referred to as a “Payoff Amount”.  Once you make the payment in full, the lien holder will issue a written “Lien Release” to you (Though the mail) accompanied by direct notification to your states DMV that you have satisfied your debts and that the lien on your title should be removed.  If this was your only lien holder and they also had possession of your physical title then you will get your title along with your lien release.  If you had an E-Title, you won’t automatically be sent anything, you will have to request a physical title from your DMV which is a process that can usually be done online.  Note- You will need a physical copy of your title to sell your car as you cannot (As of 2018) sell a car strictly with an E-Title, you need something that you can actually sign over to a buyer.

Tip:  Don’t lose your Lien Release from your lender.  If they did not properly notify the DMV you can use this document to handle everything yourself and get it resolved quickly.

Buying Or Selling A Car With A Lien On The Title Autohitch 2
Buying Or Selling A Car With A Lien On The Title

Is A Lien title Bad?

This is a difficult question to answer because there really are two ways to look at lien titles.  On one hand, a lien title is as common as a mortgage because a vast majority of cars are bought using some type of financing.  On the other hand, if you are looking to sell a car with an outstanding lien it can severely hamper your ability to do so for a couple of reasons:

  1. Removing a lien isn’t done electronically, it takes processing, paperwork, and that takes time even if it’s done correctly.
  2. Selling a car privately with a lien is practically a deal killer as most buyers are looking to pay and drive away, not become part of a process.  A vehicle with a lien also tells potential buyers the price may not be negotiable, which is also a massive turn off even when the price is fair.

Those two scenarios aside, if you are looking to sell or trade in a vehicle with a lien to a dealership or a car buying service, it’s really no problem at all.  For them, it’s just another day at the office.  Bottom line- The measure of whether a lien title is a good or a bad thing will vary upon your specific experience and how you intend to sell the car.

Does My Title Have A Lien? [How To Check Your Title]

Some of you may be reading this article and thinking, “I already paid off my loan and had my lien released so I’m good”, or, “I never had a loan on my car so there would be no reason for me to have a lien in the first place.”  Most of the time, you would be right, however, lenders and banks not properly releasing liens after payoffs are almost as common as blue skies.  Then there are liens like a”mechanics lien” that can be placed against a title that people honestly might never know about.  So, how can you avoid the embarrassment of going to sell your car only to find out that you can’t? 

Simple, Google Search (The State Of The Title) then “Vehicle Information/Title Check” and you will be able to see the most up to date information on your vehicle or a vehicle you are interested in purchasing.  If you live in Florida where Autohitch is based, use this link for a Vehicle Information Check

Important- You must check the system of the state the title was issued in, not the state you live in.

I Bought A Car With A Lien On It [What Do I Do?]

As we covered above, if someone sold you a vehicle that had a lien and they did not disclose that, they have broken the law, however, that fact alone will not get you your money back because the money exchanged is considered to be a civil matter.  You will have to consult an attorney or start looking through your state’s laws to determine the next step because each state can/will be different.  For one, the price of the vehicle may play a role in your potential options as small claims courts usually top out at $5000.

Conclusion

The main thing to focus on in dealing with vehicle liens is to not get overwhelmed.  Have a process in place and follow it.  If you are buying a used car from a private individual all you have to do is check the DMV records online and you will know right away if there is a lien.  Everyone can forge paperwork all day, but they can’t fake that.  As always, if we did not cover something that applies to you and you still need help, feel free to drop us a line in the comment section below.  I would be happy to answer you directly and get you the information you seek.  Thanks for reading, and Happy Car Buying and Selling!

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