Sarah Edwards | March 23, 2023
Summary: When you purchase a car with a loan, the lender usually places a lien on your vehicle. You won’t obtain a clear title until they release the lien. If you find yourself struggling with car debt, SoloSettle can help you settle the debt once and for all and avoid going to court.
When you buy a vehicle, you’ll likely take out a loan. Cars typically cost thousands of dollars, and most people don’t have enough savings to buy a vehicle outright. Instead, they turn to lenders who finance their purchases. In exchange, they’ll make monthly payments, including interest, for the lender’s services.
People who still owe money on their vehicles won’t have a clear title. They can’t sell the car to someone else unless they satisfy the remaining loan balance or the buyer agrees to assume the loan.
Once the individual pays off their vehicle, they’ll have full ownership. When a lender removes a lien from a paid-off car, it’s known as a lien release.
If you’ve been sued for a car loan debt, you can avoid going to court when you settle the debt.
You’ll have a lien on your vehicle if you buy it with the help of automobile financing. The lien is typically automatic. When you receive the car’s title, it will include the name of your financing company as a co-owner of the vehicle.
The lien acts as a form of protection for the lender. Since vehicle loans typically run into tens of thousands of dollars, lenders want to ensure you won’t take out the loan and run off with the vehicle without making a payment. A lien gives them the right to seize the car if you stop your monthly payments.
Sometimes, people use credit cards to pay for a vehicle. This is rare, but occasionally, consumers think they’ll save money by using a credit card to buy a car. In some cases, they can — especially if they take advantage of a no-interest financing opportunity and pay off the vehicle before the special financing ends.
However, many dealerships won’t allow you to buy a car with a credit card or will limit the amount you can spend to a certain threshold.
If you buy a car with your credit card, the bank won’t have an automatic lien on the vehicle. However, they can sue you to obtain one if you don’t keep up with your minimum payments.
Did your car loan company sue you for debt? Respond to their lawsuit with a Debt Answer.
The primary way to obtain a lien release on a car is to pay off your outstanding loan. If you stick with your monthly payment plan, you’ll eventually pay off the vehicle. Following your last payment, your lender should release the lien and give you a clear title. After that, the car is entirely yours. You can sell it, trade it, or keep it until the tires fall off.
Occasionally, creditors seek to put a lien on your vehicle for other debts, like a credit card. If you are the sole owner of your car, a creditor can seek a judgment against you and attempt to put a lien on your vehicle.
Let’s consider an example.
Example: Joan owns a 2011 Toyota Corolla, which she’s paid off. She also has a credit card with DYI Financial, which she stopped making payments on. Currently, her outstanding balance with DYI Financial is $5K. DYI Financial sends her account to collections. Joan ignores the numerous letters and phone calls. One day, she receives a Complaint notifying her of DYI Financial’s debt lawsuit against her. Joan doesn’t respond and doesn’t show up for court. The judge awards DYI Financial a judgment against Joan, and they use it to place a lien on Joan’s Toyota. The lien allows them to seize Joan’s car and sell it via auction. DYI Financial hires a towing company to take Joan’s car to the auction. She’s given a few days to repay the debt before DYI Financial sells her Toyota. Joan repays the $5K debt to DYI Financial, and they return her car.
All car liens occur due to debt. Whether your vehicle financing company includes a lien on your loan or a creditor obtains one from a judgment, you must pay the obligation to release the lien. Once you repay the debt, you’ll receive a clear title for the car.
Is a creditor trying to put a lien on your car with a judgment? Settle the dispute with the help of SoloSettle.
Debt settlement is a good way to save money and avoid going to court. If you’re being sued over a car debt, follow these three steps to settle your debt:
SoloSettle can help you with each of these steps and more. To learn more about how to settle your debt, check out this video:
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate
>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)
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Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
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