General Auto Loan Information

How to Properly Identify and Rectify Auto Liens


Bookmark and Share

Checking for auto liens is an extremely important part of buying a used car. Existing liens can prevent you from transferring the legal title of the car into your name. In a worst-case scenario your new car can be repossessed by the lender that has a lien against it. Below are the most common ways to check for existing liens.

What Is an Auto Lien?

A lien is a legal document that gives claim over a vehicle to the person holding the lien. It grants a claim over the vehicle to the person who has loaned you money to buy the vehicle. It provides a person or company a level of protection in the case that you are unable to repay the loan. The holder of an auto lien has a legal claim to the vehicle and can repossess it if the loan is unpaid.

It is vital to verify there are no outstanding liens on the vehicle. When you purchase a vehicle you want to have clear title to the car. If an existing lien exists you will be in for quite the surprise when you try to transfer thr title to the vehicle into your name and the DMV refuses your request.

Department of Motor Vehicles

The best way to see if there is a lien on the car is to check with your local DMV. You will need the VIN (Vehicle Identification Number) of the vehicle. You might want to jot down the license plate number as well. The majority of DMVs have their databases online these days so your first stop should be their website. Usually lien information will be in the title or registering a car section of the site. Simply enter the VIN of the car and it will bring up the details or any liens. If your DMV does not have this information online you should be able to get lien information by calling the DMV office or visiting in person.

Car Lemon Report

A car lemon report such as Autocheck.com will provide lien information in its reports. You will need the VIN to pull up the report on the vehicle. Unlike the DMV, which usually provides this information for free, you will have to pay for the report and prices range from $18.00 to $35.00. The report will contain information about liens as well as any title issues, service records and other information.

If a lien does turn up on any of these reports, it is important that you resolve the issue before proceeding with the purchase. Often times the lien will have been settled but the bank or lien holder has not processed the proper paperwork to remove the lien. Make sure you have a loan satisfaction letter from the bank or lien holder before closing the deal.

There are many components to buying a used car but one of the most important is checking for existing liens. You can do this at your local DMV or car lemon report sites.

However if the shoe is on the other foot and you need to dissolve a lien on your behalf, here are some tips on resolving the matter.

Installment Payments

If the lien holder will agree, you can arrange to pay off the lien in installments while still using your car. This is perhaps the ideal arrangement since you can still get to and from work easily and earn money to pay off the debt bit by bit.

Be aware, however, that it should be a proper, legal arrangement rather than just a casually arranged plan. This is for the safety of both parties and prevents arguments later over whether the lien was paid off. You should also be prepared to pay more than the sum of the lien because of interest payments on the debt. This is only fair since you’ll be paying over a longer period.

Pay in Full

The ideal way to pay off your lien is to simply pay it in full. If you do have the money in your account, paying off the debt is always worthwhile since your car will then be free and clear and you won’t have the threat of legal action hovering over you.

The problem is that people will usually pay household bills if they have the money so the chances are that you won’t have the funds to cover the amount owed on the lien. Usually, you’ll need to try and make other arrangements.

Challenging the Lien

Under certain circumstances, you can challenge a lien in court although you’ll probably need the money to pay an attorney in order to do it.

With a mechanic’s lien, there’s a 20-day period before it takes effect. The lien has to be recorded in a proper time frame once the repairs have been finished. Also, if the mechanic forecloses on the lien, which is his right, the lien must be recorded within the appropriate time frame as well. In other words, the rules are quite strict and if they’re not followed properly, you have the right to challenge the lien in court.


Using an Attorney

This option might well prove more expensive than paying off the lien but if you feel it’s necessary, it can be a successful route to take. A lawyer whose specialty is property law might be able to find some legal loophole that invalidates the lien. If he can, a court might be persuaded to invalidate the lien. In this instance, however, you will ruin any relationship you’ve enjoyed with the mechanic.

Bookmark and Share