QandAs: Autos

Do I need a Lien Release if a purchased vehicle had a loan?

Answer:
The short answer is most likely yes. For one

reason or another, most States require that you have a lien release when tagging and titling a previously owned vehicle that was purchased with a loan.

A very common scenario is that you purchase a Ferrari 430 from John Doe. John Doe used Capitol One Auto Finance to pay for the $275,000 car. Capitol One Auto Finance now basically owns the vehicle until John pays it off. You pay John Doe $175,000 for the Ferrari either with another loan or with cash. John Doe signs over the title, writes you a bill of sale and your good to go right? Wrong, John now needs to pay off that $275,000 loan before you can title and tag the Ferrari at your local DMV . Technically you own the vehicle seeing that John signed the title over but your State will not let you purchase a tag for the vehicle until you can show that the previous loan was paid off.

John sends the $175,000 plus what ever else he owed on the loan to Capitol One. Capitol One then holds the funds for a certain period to ensure they are good and after that period they will send you a lien release. John then needs to forward that lien release to you so that you can take it, plus the bill of sale , plus your proof of insurance to the DMV. At that point you should be able to pay your sales tax and get a tag for the Ferrari. Nice car by the way!


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