What happens after you pay off a car loan?

After a long 60 months, I finally paid off my car loan, and I can’t wait to use the extra money to start modifying the vehicle. However, I’ve never had a loan before, so what happens after you pay off a car loan?

Answer
Congratulations! Paying off your car loan must feel fantastic, and I’m sure you’re excited to modify the vehicle.
After you pay off a car loan, you gain full ownership of the vehicle, and the lienholder can be removed from the title. Beyond that, there’s not much you need to do.
The process to get a free and clear title varies by state.
  • In a title-holding state, the lender possesses the title for the duration of the loan. Once you’ve made the final payment, the lender should mail you a free and clear title—or at the very least, the old title and lien release document.
  • In a non-title-holding state, you should already have the title and will need to visit the DMV to have the lienholder removed.
Once your title is squared away, you should notify your insurance company because your rate will likely be adjusted. Additionally, you can now drop your comprehensive and collision coverage—although they are smart to keep if you can afford it.
If you want to ensure you’re not overpaying for coverage and find a policy that protects your modifications, use Jerry. Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!
Jack Walsh
Answered on Dec 08, 2021
Jack is an insurance specialist and writer living in Buffalo, New York. He has a BA from Union College and worked as an insurance agent with Jerry before joining our content team. He enjoys using data and research to break down complex subjects and convey a story. In his spare time, Jack enjoys cycling, cooking, and exploring Buffalo’s beautiful waterfront.
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