you used to finance it. The lien release isn’t finished until you have completed all terms set out in your lien agreement and your lender has signed the vehicle title over to your name.

Getting approved for an auto loan is a great accomplishment in the car-buying process, but being released from your lien is an even better accomplishment in the grander scheme of car ownership!

If you’ve recently paid off a loan, you’re ready to become the legal owner of your car. However, you’ll likely need to make a trip to your state DMV before you can officially take on full ownership of the vehicle. To help you along, here’s everything you need to know about the lien release process for a financed car.

What is a lien release?

A lien release is an official release of a financial institution’s claim to a vehicle for which they have provided financing. Basically, it marks the end of a

car lien

for a financed vehicle.

When you take out money to finance a new car, your lender becomes what is called a lienholder. This person will be listed on the

certificate of title

for your vehicle and has a legal right to claim it if you fail to uphold your end of the lien agreement. The lien release occurs when you see the lien agreement through to your final payment and the completion of any other terms.

In some cases, a mechanic can also become a lienholder on a vehicle if the owner fails to pay for a repair. In states that allow mechanic’s liens, like

California

, you would only be able to pursue a lien release if you pay the remaining balance in full by a certain time period—typically 30 business days. Failure to do so could result in your vehicle being auctioned off.

Key Takeaway A lien release is the official end of a lien once you have fulfilled all the terms of a car loan or other financial agreement for your car.

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How to get a car lien release

A car lien release doesn’t automatically occur once you’ve made your final payment on a car or repair. Instead, it’s up to the borrower to request the official lien release documents.

Start by tracking down your lienholder’s information. This can typically be found on the title information for your car, but you may have to do more research to gather mailing addresses to contact the individual or corporate entity with a claim to the lien.

Next, draft a lien release request letter with the following information:

Your vehicle identification number (VIN)

The year, make, and model of your car

Your name

The lienholder’s information

Double-check your lien status to make sure it’s all paid off and send this letter with stamped and addressed return envelopes. In some cases, your lienholder may also choose to release their right to any remaining interest on your car, at which point they would need to complete a letter of non-interest. This may need to be submitted to a higher power with your lien release request.

Assuming everything goes according to plan, your lienholder should respond with an official lien release document that you can use to take official ownership of your car! Use it to let your insurance company know that you are now the sole owner of your car and to get a new title at your local department of motor vehicles.

How to apply for a clear car title

You aren’t technically free of your lien until you apply for a clear title at your state DMV.

Take your lien release documents and non-interest letter (if applicable) to your local DMV office to

initiate a title transfer

and officially become the new owner of your car. You’ll need to pay any remaining registration, tax, and transfer fees to proceed with the process.

Once the DMV has received all payments and applicable lien release documents, they will issue a new title that has

removed the lienholder’s name

and now lists you under the owner’s name. Be sure to check your state’s specific process for lien releases and title transfers to make sure the process is done to the fullest extent of the law.

Once you have a clear title in your name alone, you are officially the sole owner of your once-financed car. Congratulations and enjoy your new-found freedom!

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