A vehicle lien release is a document that officially declares that the lien on your vehicle title has been removed and you will be free to take action with your vehicle. This document removes any restrictions on what you can do with your car. A person is typically eligible for a vehicle lien release when the loan on the vehicle has been paid back to the lender.
Your lender, who has loaned you money to purchase a vehicle, places a lien on your title until the loan is paid off in its entirety. A lien is a claim on the property for the security of payment. When a lender loans a borrower (you) money to purchase a vehicle, they want to make sure that they are paid back plus interest. Your lender, also known as your lienholder, will remain printed on the front of your vehicle title until the loan is paid off. A lien on a vehicle title is a cloud on the title that places a hold on ownership; once it’s paid off, you can get a title for your car or you can sell it or trade it in.
Vehicle lien release process
The process of filing for a vehicle lien release will vary depending on your state, your situation, and your lender. However, the lien release process typically consists of the following four steps:
Step 1: Locate your lienholder
Step 2: Compile your lien release request letter and non-interest letter
Step 3: Mail your lien release request letter through certified mail
Step 4: Obtain the signed lien release letter and apply for a clear title
How to locate a lienholder
Your vehicle title lienholder is the lender of your auto loan. To determine who this is, check your bank records and identify the business entity that received your monthly car payments. Once this entity has been identified, make note of the mailing address, physical address, registered agent address, corporate address, and any other address listed for this entity. This information can be pulled from the lienholder’s website or through your state’s Secretary of State business entity database.
How to write your lien release request letter and letter of non-interest
To officially request your lien be released from the title of your vehicle, you must send the lienholder a lien release request letter. In this letter, you must include the following information:
- Owner name
- Lienholder information
If your lienholder has no further interest in collecting on the lien and would like to legally sign off on their interests, ask them to complete a letter of non-interest. The letter of non-interest should include all of the contents of the lien release request letter and should also provide a section where the lienholder can sign away their interests.
Make copies of your lien release documents to be mailed to each one of the addresses listed for your lienholder.
Mailing your lien release request through certified mail
Using the addresses pulled from the Secretary of State or the lienholder’s website, mail a copy of your documents to each address via certified mail. Each envelope should include:
- Lien release request letter
- Letter of non-interest
- Pre-labeled and pre-stamped return envelope
Although mailing identical copies to multiple locations may seem redundant, it is the best way to ensure that your lien release request is received by the appropriate party. As many lienholders do not have a lien release department with staff standing by to release liens as they come in, it is important to attempt to reach as many locations as possible to reach the correct recipient or at least the recipient that has the ability to help.
When you release your lien on a vehicle title by mail, send the document via certified mail. A paper trail will thus be created demonstrating your attempt to release the lien. This evidence will prove useful if your lender cannot be located later. Most DMVs require that you send documents related to motor vehicle transactions by certified mail.
Applying for a clear title
When your lienholder has released the lien on your vehicle, you can take the lien release letter and the letter of non-interest to your state DMV for processing. Before you can receive a clear title for your vehicle, however, you will need to pay all registration and tax fees as well as any title transfer fees.
Typically, your lienholder is required to release your title once the loan has been paid. Unfortunately, that doesn’t always happen. Just because your loan is paid doesn’t mean that the lien has been released; you may still have to go through the vehicle lien release process and notify the DMV of the satisfied loan.