Whether you\u2019re trying to file a lien on someone else\u2019s car or figuring out the lien on your own vehicle\u2019s title, there are a few ways to navigate the process.<\/p>\n\n\n\n
If you\u2019re unfamiliar with car liens, they might sound a bit intimidating\u2014but they\u2019re a pretty routine part of car buying and car ownership for most people. That doesn\u2019t mean they\u2019re simple to understand, and all the different state laws can make them even more confusing.<\/p>\n\n\n\n
Whether we\u2019re talking leases or loans and their accompanying liens, legal car ownership can get complicated fast. Read on as we demystify the world of car liens. We\u2019ll go over what liens are, how to add one to a certificate of title, and how to buy or sell a car with an existing lien.<\/p>\n\n\n\n
Adding a lienholder to a car title is typically straightforward, but the process will differ depending on what state you\u2019re in. By and large, the new lienholder will be the one to file with the state. If there was no lien on the title to begin with, however, the owner might be required to amend it before the new lienholder can be added.<\/p>\n\n\n\n
Since every state has different rules and procedures, there\u2019s no one specific route to adding a lienholder to a vehicle title. For the most part, though, you\u2019ll need to contact your state\u2019s Department of Motor Vehicles and fill out the appropriate form(s) to amend the title or start a brand new title application.<\/p>\n\n\n\n
This will generally require the following information:<\/p>\n\n\n\n
Once you\u2019ve filled out the proper forms, you\u2019ll turn them in and pay the title fee. After it\u2019s processed, you\u2019ll likely receive the updated paper title with the new lien listed. Many states have electronic lien processes, as well as ways to check your lien status online.<\/p>\n\n\n\n
There\u2019s a good chance your car already has a lien! There are a few cases, however, when you might need to add a lien to an already-titled vehicle that may or may not be yours.<\/p>\n\n\n\n
Let\u2019s go over the most common types of car liens and when you\u2019d need to add one to a car\u2019s title.<\/p>\n\n\n\n
Financing liens are the most common type of lien. If you\u2019ve ever financed a vehicle, odds are you\u2019ve had a lien\u2014held by the creditor\u2014listed on your vehicle\u2019s title from the time you bought it.<\/p>\n\n\n\n
If you financed your car through the dealership, they hold the lien. If you financed through your financial institution, they\u2019re the lienholders. This lien will stay on your vehicle title until you\u2019ve paid off your debt entirely. At this point, the lien will be removed and you\u2019ll officially be the sole owner of the vehicle.<\/p>\n\n\n\n
Since a lien is essentially a claim to ownership rights, a financing lien is to ensure that you make payments to the lender to pay off your debt. Without it, the lender has no legal protection if you stop making payments. With a lien, however, they could repossess your car if you fail to make the agreed payments.<\/p>\n\n\n\n
Your financing lender isn\u2019t the only person or entity that can have a lien on your car\u2019s title. If you\u2019ve had your car serviced in some way, the mechanic can file for a mechanic’s lien on your car if you fail to pay them, giving them ownership claims until the debt is settled. These services could include anything from making repairs to towing to selling you parts.<\/p>\n\n\n\n
In these cases, a written contract typically isn\u2019t formally necessary to file the lien. If a mechanic is added to a vehicle\u2019s title along with another lienholder, the mechanic\u2019s lien will generally take precedence over the lender\u2019s lien, giving the mechanic the power to keep the vehicle or sell the vehicle after a specific amount of time. A mechanic\u2019s lien can be placed on your title whether the service provider still has possession of your car or not.<\/p>\n\n\n\n
Depending on the state, filing a mechanic\u2019s lien may include details regarding:<\/p>\n\n\n\n
If a parent with primary custody is owed child support, they can file a lien on the property of the parent who owes money\u2014including their car. There are several ways to do this, and they all depend on your specific state\u2019s laws.<\/p>\n\n\n\n
In general, the custodial parent can file a lien on the other parent\u2019s vehicle, house, or other property. Depending on the circumstance, the lienholder can then legally sell the property or wait until the property is refinanced or sold, then collect their debt from the profit. Otherwise, the lien will remain on the title until the custodial parent removes it or the owed child support has been paid in full\u2014even if the child is no longer eligible for support.<\/p>\n\n\n\n
The majority of states allow these types of liens to be filed after a missed court-ordered support payment, but some states require an official judgment of the circumstance before filing the lien. Your state\u2019s specific requirements can be found on the Office of Child Support Enforcement\u2019s website<\/a>.<\/p>\n\n\n\n Buying a vehicle with an existing lien isn\u2019t impossible, but it will require a bit more work than simply drafting a bill of sale and exchanging payment. If you\u2019re thinking of purchasing a car with a lien, here are some of the routes you might take:<\/p>\n\n\n\n Of course, the easiest option is if the seller simply pays off the loan before you buy the car. If the seller can\u2019t or isn\u2019t willing to pay off the loan, however, it may be in your best interest to communicate with the lienholder directly before negotiating with the seller. This way you won\u2019t be paying the seller more than is fair.<\/p>\n\n\n\n No matter what course of action you end up taking, it\u2019s a good idea to make sure the lien has been removed before you finalize the purchase unless you\u2019re assuming the loan as part of your purchase.<\/p>\n\n\n\n If your car has a lien but you\u2019re itching to sell it, you\u2019re not out of luck. There are a few different ways to proceed.<\/p>\n\n\n\n The most straightforward way to do this is to pay off your loan before you transfer the title. Of course, this process also depends on your state\u2019s specific laws. In New York<\/a>, for instance, the lender will provide a \u201crelease of lien\u201d when you pay off your loan. This release must be attached to the title before selling.<\/p>\n\n\n\n In other states, you as the owner may have the title instead of the lienholder, but you\u2019ll probably still have to complete a certain process to release the lien after paying off the loan.<\/p>\n\n\n\n If paying off your car before selling it isn\u2019t a viable financial move for you, talk to your lienholder about your options. They may accept payment directly from the buyer, who will effectively pay off your loan and receive the car\u2019s title in return.<\/p>\n\n\n\n Learn more<\/strong>: How to sell a car for the best price<\/a><\/p>\n\n\n\nBuying a car with a lien<\/h2>\n\n\n\n
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Selling a car with a lien<\/h2>\n\n\n\n
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