How To Remove the Lien Holder from Your Automobile Title

by Contributor

If you have finally made the last auto loan payment, you're ready to do the happy dance. No more car payments! Now you can take that extra money and put it in a savings account. Before you get too happy, don't forget to do first things first -- remove the lien from your car.


Get a letter of loan satisfaction from the lien holder. Before you can remove the lien from any of your documents, you must have proof of loan satisfaction.


Send a copy of the loan satisfaction letter along with the appropriate forms to the department of motor vehicles for your state. Once they receive the documentation, they will begin to set the wheels in motion to send you a new title for your car that is free and clear of the lien holder.


Contact your auto insurance company. Your auto insurance policy most likely has a Loss Payee and Addition Insured endorsement, which named the lien holder as an additional insured and loss payee. You want to have them removed immediately. If you tarry in having them removed and have an auto accident, the insurance company is obligated to issue a payment check in the name of the registered owner and the loss payee. Therefore, even though you've paid off the car loan, if you tarry in removing the lien holder from your insurance policy, claim checks will be issued to you and the bank that no longer has an interest in the car. You don't want that to happen.


Keep the letter of loan satisfaction in a safe place. Mistakes do happen. Just in case someone has a question as to whether or not you have successfully paid the auto loan off, you want to be able to put your hands on the letter to show them proof.

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