When purchasing a car with a loan from a private or financial institution or another type of loan, the name of the lender is entered on the certificate of ownership as the Lien owner. Lien is a legal right to some of the assets granted to creditors and serves as a guarantee of basic obligations such as repayment of housing and car loans. If that obligation is not fulfilled, the creditor may seize the assets subject to Lien.
When the vehicle loan is fully paid, the Lien owner’s name will be removed from the title and the statutory owner will be able to sell the vehicle by filling out a few documents. However, if the Lien owner decides to sell the car before it is paid in full, the owner has several options to remove the Lien owner from the title and transfer ownership to the new buyer. .. Continue reading for more information on Lien and how to sell your vehicle if you still have Lien.
- Many people buy a car using a loan or some other form of financing. This makes the lender the Lien owner of the car.
- Lien owners are not vehicle owners (you are), but they have a financial interest in real estate.
- If you are unable to meet your loan obligations, the Lien owner can seize the vehicle that is the subject of the Lien.
- If you have a loan balance and want to sell your car, you need to meet your debt with the Lien holder.
- There are several ways to repay Lien and sell your car with a clear title.
Sell through a car dealer
The easiest way to sell a car with a lien is to sell it at a car dealership, especially if the car is a trade-in. The dealer will work directly with the Lien owner (usually a credit union or bank) listed in the title to facilitate the transfer of ownership.
In this process, the dealer arranges payment of the full loan balance by using the proceeds from the trade-in vehicle or by adding the repayment amount to the loan used to purchase a new car.
The biggest drawback of going through a dealer to sell a car with a lien in the title is that the amount paid for a trade-in car is usually less than what can be achieved by selling it personally. However, the process of selling to individual buyers also requires additional work by the seller. First, the seller must contact the lender to determine the total amount required to repay the loan, including additional charges, in order to meet the debt and remove the Lien owner from the title.
Be sure to refer to resources on car value such as the Kelley Blue Book before going to the dealership.
Make a sale in the lender’s office
This is probably the fastest way to sell a car, repay a loan, remove ownership from the title, and transfer ownership. This option is also the fastest way for sellers to earn revenue from sales, including lien of ownership, after reaching an agreement.
Either the buyer or the seller can transfer the funds to the lender to pay off the loan, and the documents can usually be executed to transfer ownership to the buyer at once. Call in advance to make sure someone in your local office is available to facilitate the transaction, whether it’s a big or small lender. And make sure both you and the buyer are attending the transaction.
While this may be the easiest option, there are drawbacks to running a transaction in the lender’s office. The most obvious is the convenience factor. It may not be the most convenient place for both you and the buyer to attend. This means that you and your buyer must travel if your office is not nearby, especially if the Lien owner is an out-of-state lender.
Lien paid by the buyer
If it is not possible to settle the transaction at the lender’s office, the buyer can pay the lender directly by wire transfer or check. Either of these methods can meet the lien and can also be used to pay the seller the remaining balance.
This option provides the purchaser with an additional level of warranty. This allows you to send the funds directly to the lender, completely avoiding the need to send the sale price to the seller, and the seller has to send the funds to the lender to fill the loan.
Depending on the law of the state in which the sale takes place, the buyer may be able to send documents and forwarding instructions along with the payment to receive a cleared certificate of ownership directly from the lender. If they are unable to do this, the lender can instead send the seller a cleared title. In either case, both parties must sign a certificate of ownership to complete the sale and transfer ownership to the purchaser.
One of the problems with this option is the fact that it can take a long time for a lender or lien owner to issue a check if revenue remains after the loan is repaid. For example, suppose your car has a balance of $ 9,000. However, the purchaser agrees to pay $ 9,500 for some of the upgrades made, such as the new stereo system. It may take some time to make money. That’s because you’re at the mercy of the Lien owner who issues your income check.
Use an escrow account
Like holding accounts, escrow accounts are commonly used in the real estate industry. However, this service can also be used for other transactions such as vehicle sales. Escrow accounts include the use of third parties to hold money until the transaction is completed. This party is usually neutral and has no relationship with the seller or buyer.
An escrow account allows a third party to verify the buyer’s funds, confirm the removal of the Lien owner, and facilitate the transfer of ownership to complete the transaction, thus providing security to both parties. Additional layers of are added.
The fee for using an escrow account adds additional costs to the transaction and is usually based on the total amount of vehicle sales. Escrow accounts protect the interests of both sellers and buyers, so service fees are usually split between the parties.
You can also find escrow services through online searches and reviews, ask friends and family for references, and check with dealers and lenders for recommendations.
Both buyers and sellers need to be aware of fake escrow services, especially if one party is sticking to the use of a particular escrow service. Once engaged, the scammers may confirm that they have received the funds and guarantee to the seller that it is okay to release the vehicle. Similarly, a fake escrow company may guarantee to the buyer that Lien is clear and the title has been transferred in order to receive payment. That’s why it’s important to do some research and make sure you’re dealing with a reputable agency.
What is a lien holder?
A lien holder is a party that has a legal interest in an asset such as a vehicle.
What does it mean to have a lien on the car?
The car lien acts as a form of security for the lien owner. This allows the lien holder (usually the lender) to own the asset in question if the borrower fails to meet its financial obligations. The person who owns the car cannot dispose of the car without the permission of the owner of Lien.
Can Lienholder get in your car?
If you pay and make your loan the default, the Lien owner can own your car.
Is the lien holder the owner?
The name of the lien owner is on the certificate of ownership, but he is not actually the owner of the vehicle. By buying a car, you become the real owner, but the lender simply has a financial interest in the property.
How do I remove the lien holder?
To remove the lien holder, you need to prove that the lien is full. So the lien holder is …