November 13, 2018
What Is a Car Lien?
You’ve heard the term “car lien” before when you found out about your approved car loan, but does the question, “What is a car lien?” keep ringing in the back of your head? Has this term always been a little shady to you, which is the reason why you’re a bit hesitant to talk about it? If that’s the case, then it’s about time that we put an end to the confusion by addressing this persistent and nagging query.
Understand the Basics
Liens on cars are created when the vehicles are taken out on loans. They act as insurance policies that protect the creditor, lender or any interested party, in the event that the borrower fails to make regular payments as agreed. Until the loan is paid in full and the car lien released, the vehicle’s title is still owned by the loan provider.
In other words, if you default on a loan, the lienholder or the lender has the legal right to repossess the vehicle without prior notice. The car serves as an item pledged as security for your loan – a collateral.
Who Files for a Lien?
The lender does the car lien filing to create a public record with the state’s Department of Motor Vehicles (DMV). As mentioned earlier, the auto lender takes hold of the car’s title as well.
How is a Car Lien Released?
We mentioned earlier that the car lien is released when the loan is fully paid off by the borrower. It’s important to take note though that the rules on a car lien’s release vary from state to state. Under normal circumstances, the release document is sent by the lienholder to the state DMV. The DMV will then update the vehicle’s title and send it to you. You may also request for a copy of the release document from the creditor. With your name printed on the title of the vehicle, you become its full-fledged owner.
‘How Can I Check for a Lien on a Car?’
If you’re purchasing a secondhand car, one of the first things that you should check is the existence of any outstanding lien on it. If there is one, this would mean that you’d be paying off the remaining loan balance.
This could also mean that the same rules that applied to the previous owner can now be applied to you. Should you default on the loan, the creditor would repossess the vehicle.
Here are some of the best tactics to check for a car’s lien:
- Always inspect the vehicle’s title and keep your eyes peeled for any past or current records of liens.
- Request for a copy of the lien release document from the seller.
- Drop by your state’s DMV office or use an online service to run a vehicle check using the VIN (Vehicle Identification Number).
- Pay online service providers to run a vehicle history check on outstanding liens and records of the vehicle’s involvement in any previous accident.
We at Veteran Car Donations hope that this information has helped you understand the basic concepts pertaining to car liens. The next time somebody asks you, “What is a car lien?” you’ll know what to say.
Disposing of Your Old Car? Get the Best Deal with Us
On a side note, if you’re getting a secondhand car to replace an older one you’re using that’s giving you constant trouble on the road, consider donating that clunker to us at Veteran Car Donations for the benefit of the veteran community in your area.
We offer the best deal in town: We’ll provide you with a fast and absolutely free professional towing service. Moreover, you’ll gain back your vehicle’s worth by way of the tax deduction you’ll get after we sold that vehicle at auction.
Most important of all, your car donation will provide life-transforming benefits to the impoverished veterans in your community. We use the proceeds from the auction sale of your donated vehicle to support the programs of our nonprofit partners whose mission is to uplift the living conditions of our nation’s former soldiers who are suffering from poverty, service-connected disabilities and other health issues, lack of jobs, and homelessness.
Your donation will enable these veterans to receive mortgage-free and specially adapted housing, physical and mental health care, job opportunities, education scholarships, and other benefits.
You can donate to Veteran Car Donations by either calling us or filling out our online donation form. We accept vehicle donations wherever you are in the United States since we have car donation programs in all 50 states.
Call us now at 877-594-5822, and donate your old car for a truly worthy cause!