What Is an Automotive Lien Holder?

An automotive lien holder is a person or company that owns all or part of a car, usually because the person whose name is on the car title borrowed money from the lien holder. Nearly all auto loans are secured loans, meaning that the lender places a lien on the car as security in case the borrower fails to repay the loan.

Identification

The name of the lien holder usually appears on a car title in the section that lists security interests. When the lien is removed, the car owner receives a new title that doesn't list a lien holder. If you don't have access to the car title, contact the department of motor vehicles in the state in which the car is titled to find out if there is a lien holder listed. You'll need the Vehicle Identification Number (VIN), usually located on the driver's side of the car dashboard.

Ownership Rights

The lien holder has partial ownership rights over the vehicle. The lien usually spells out in what circumstances the lien holder can seize ownership. For example, a lender might specify that if the borrower is at least 10 days late on a car payment, the lender can repossess the vehicle. The lender then sells the vehicle and uses the proceeds to repay the remaining loan balance. Any remaining proceeds, minus administrative costs, are returned to the borrower.

Lien Release

The main way to be released from an automotive lien is to pay off the loan in full. After the lien holder processes the final loan payment and ensures that there is no more balance on the loan, the lien holder releases the lien. The car owner receives a new title that no longer lists a lien holder. In some cases, a lien holder might accept partial payment of the loan and agree to release the lien. This is rare, though, and generally doesn't occur unless if the partial payment is more than the lien holder would receive from repossessing and selling the car.

Selling the Car

When you're selling a car with a lien on it, you must take extra steps in the sale process. Contact your lender to find out exactly how much you owe on the loan and discuss ways to release the lien. If you can't afford to pay off the balance, you might need to get another short-term loan to pay off the car loan and get the lien released. Another option is to conduct the sale at the lender's office and have the buyer pay off the remainder of your loan as part of the purchase.

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How to Figure the Blue Book Values for Vehicles Older Than 1989

The Kelley Blue Book is widely accepted as an accurate, but also fair value of a vehicle to both the buyer and the seller. Historically, Kelley Blue Books have been available in bound form, but you can now access Kelley Blue Book information on the Internet by answering a few questions about the vehicle in question. Unfortunately, neither the website nor the most recently published books go as far back as 1989 or earlier. You can, however, still determine a value for your car using the Kelley Blue Book.

Instructions

1

Locate a used car archive copy of the Kelley Blue Book. You can contact the Kelley Blue Book Company directly by phone at 800-258-3266 and press option "2" at the prompt. This connects you with customer service, where you can buy an archive copy of the most recent Blue Book that will have your vehicle's information. You can also contact local libraries or credit unions to ask if they have an archive library of Kelley Blue Books.

2

Locate the make, model and year of the vehicle you wish to value. Near your vehicle's information is a chart with several condition types. Select the proper condition of the vehicle in question. You can select from "Excellent," "Good" and "Fair." "Excellent" means the vehicle is in like-new condition with no paint or bodywork. The engine is in near perfect condition. "Good" means that the vehicle may have had some work done in the past, but it is in serviceable condition. "Fair" indicates that the vehicle has cosmetic or other problems.

3

Follow the chart from your selected condition to the "Value." Select the proper value depending on your intentions for the vehicle. The "Private Party Value" is the amount you might reasonably expect a buyer to pay for the vehicle if they purchased it directly from you. "Suggested Retail Value" is the amount a dealership might expect to charge for the same vehicle in the condition indicated. "Trade-in Value" is the amount you might expect from a dealership to use the vehicle in a trade-in situation. Compare your vehicle's Blue Book value to others of the same condition in local newspapers, shoppers and online classifieds to ensure your price is equitable to current value of the vehicle. Adjust as necessary.

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How Can I Check If a Lien on the Car Has Been Paid?

If you buy a car that has a lien on it, you are most likely to have a problem getting a clear title. Even if you somehow get the title in hand, you may still have issues registering and keeping the car until the debt is paid. Whether or not the seller says so, check that the lien has been paid in full before you close the deal. A vehicle lien holder can be a bank, title loan company or even a repair shop.

Instructions

1

Ask the seller to see the actual title. If a lien holder is still listed on the title, chances are the debt hasn't yet been paid. When the loan or debt is paid off, the lien holder sends a release to the department of motor vehicles so that it can update its records and issue a clear title. If the seller cannot produce the title, that is another indication that there might still be an unpaid lien on the car.

2

Retrieve the vehicle identification number (VIN) for the car, as well as the odometer reading, current plate number, year, make, model and color from the seller.

3

Call your local department of motor vehicles office, provide information you have on the car and ask for the lien status. You may have to order and pay for a full vehicle history report. You can also order this report from a third-party vehicle history reporting company.

4

Call the lien holder, if the person is still listed on the vehicle title, to confirm that a current and open debt is still attached to the vehicle (provide the VIN). You may not get full details about the debt, since you're not the account holder. But as a potential buyer, you may be able to at least confirm if a lien exists.

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How to End an Auto Lease Early

Auto leases suit individuals who want to have a low car payment. Unfortunately, getting out of such a lease early poses certain challenges, and if you go about it the wrong way, it can cost you thousands of dollars. There is an inexpensive way to terminate lease agreements early. The key is knowing the terms of your agreement and communicating with your leasing company to work out a deal.

Instructions

1

Return the car within the three-day window. Check your lease agreement to see if there is a clause that allows you to cancel your lease within three business days. Some states offer a three-day cancellation period on contracts. If so, act quickly and return the car in good condition to avoid penalties.

2

Speak with your leasing company. Talk with a representative from the company to see if it allows lease transfers. Ask about your payoff balance.

3

Seek a new owner for the car. If your leasing company permits transfers, visit websites such as Swapalease to find someone to take over your lease payments. You can also speak with friends and family members to see if they are interested in leasing your vehicle. Contact your leasing company if you find someone willing to do so.

4

Satisfy the balance. Bring your leased car back to the dealership early and pay off the remaining balance to complete the transaction and avoid financial and credit consequences.

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How to Know the Equity of Used Vehicles

If hoping to make a profit when selling your used vehicle, you'll need to determine the amount of equity in the vehicle. Equity refers to the difference between the payoff balance on your vehicle and the car's value. Regrettably, some cars have negative equity, wherein the amount owed to a lender is more than the car's worth. In this situation, it becomes difficult to sell a car.

Instructions

1

Speak with your auto loan lender or read your most recent auto loan statement to learn your payoff balance.

2

Take your car to a dealership for an appraisal. Some auto dealerships offer complimentary appraisals. The appraiser will evaluate the condition of your vehicle and then determine the car's value.

3

Use online tools to learn your car's value. You can also estimate your car's value with websites, such as Kelley Blue Book. Choose the make and model of your vehicle, enter the mileage and estimate the car's condition. Based on this information, the website determines how much you can sell the car for and the trade-in value of the vehicle.

4

Calculate the equity. Once you learn your car's value, subtract your payoff balance from this figure to know if you have equity. For example, if your car is worth $10,000 and you owe the lender $7,000, the car's equity is $3,000.

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Car Insurance and Auto Financing

Car insurance is a requirement in most states. If you plan to buy a new vehicle in the near future, you'll need insurance to purchase, register and drive the car legally. Before you visit the dealership, it is important that you understand the various requirements of insuring a car, especially if you plan to seek financing to pay for the purchase.

Car Insurance Coverage

Drivers have two main insurance options when buying a car. The car owner can get basic liability coverage or full coverage. Basic liability coverage protects other parties that are affected by the driver or owner's negligence, such as property damage in case of an accident. Full coverage car insurance covers the owner of the car as well with both comprehensive and collision protection. For example, the owner's car is repaired or replaced (up to the maximum outlined in the policy) in case of damage or theft in addition to liability coverage for other parties. The minimum coverage required to own a car varies by state.

When Financing

When you buy a car with cash, you can choose between liability or full coverage, as long as it meets your state's minimum requirements. But if you finance your car, your lender will most likely require you to get full coverage on the vehicle. Since you've borrowed the funds for the car, the lending company needs assurance that it can recover the value of the car in case of an accident, theft or property damage.

When the Loan Is Paid

You don't have to keep full coverage on the vehicle for the entire time you own the car. On the day you pay off your loan in full, including any additional fees required by the lender, you own the car outright. The lender sends you the title, and you now have full decision-making power regarding the car. You have the option to get liability-only coverage on the car, or you can keep your full-coverage policy.

Suggestions

If you finance your car, you should find the most affordable insurance coverage possible. One of the most efficient ways of finding a reasonably priced, full-coverage policy is by searching online. Use a car insurance website that allows you to retrieve price quotes from a variety of providers at once. You should also check your driver's record (you can buy one from your local department of motor vehicles office) and clear up any issues before buying and insuring a new car to ensure that you'll get the best quote possible.

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Can I Get a Loan on My Car?

You can take out an automobile loan to buy a new car or to refinance a car that you already own. Typically, though, you can only have one lien on a car, so if you already have an existing loan you must pay that loan off with proceeds from your new loan.

Loan to Value

Your loan amount cannot exceed the value of your car and lender's determined value by looking in the Kelley Blue Book. The number of miles the car has been driven and its overall state have an impact on its value as the Blue Book prices cars based on both of these factors. Where you live also has an impact on the value of your car since automobile prices vary in different parts of the nation and Kelley Blue Book values reflect these regional price fluctuations. You can normally borrow up to 100 percent of the current value of your car although some lenders may limit your loan to 80 percent of the value.

Term

Cars do not last forever and most lenders limit car loans to six years because after that point most car warranties end and cars begin to lose value very quickly. Lenders typically do not write loans on cars that are older than seven years, and you can usually only take out a two-year loan on a car that is more than four years old. Lenders only like to have liens on cars while those cars actually have some value.

Interest Rates

Car loans are usually fixed-rate loans. People with credit scores in excess of 740 get the lowest rates on car loans, but you can normally qualify for a loan as long as you have a credit score of 640 or better. Rates for loans on new cars are lower than rates on older cars because older cars are more likely to have mechanical problems and lose value more quickly than new vehicles.

Considerations

You can refinance an existing car loan with a new low rate loan, but before you do so you should check how your current lender applies interest to your loan. On some loans your principal accrues interest over the course of the loan in which case you can benefit from refinancing into a low rate loan. However, other lenders add the total cost of your interest into your loan amount from the outset, which means that to payoff your loan you must payoff the principal and total interest due over the course of the loan. If you refinance such a loan you could end up losing money because you pay all of the interest due on the original loan and then start paying interest to another lender on the new loan.

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