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How to Get Your Title After Paying Off Car Loan

By Michael O'Connor | July 24, 2023

How to Get Your New Title After Paying Off a Loan:

After you pay off your auto loan, you must get a new title to ensure you are the only listed owner. That allows you to do whatever you want with the vehicle, including selling it, should that be something you are considering doing.

However, depending on the circumstances, you may have to go through a longer or more complex process to get the duplicate title and remove the lender's name. Knowing how to go about this will make the whole thing easier when the time comes.

Understand the Procedure for Your State

Generally, the process for getting a new title for your vehicle will change from state to state. Every state has its own set of rules and regulations, and you should know what the requirements are for where you live. The best way to do this is to go to your state DMV's website and see the steps to get a new title. This way, you can be sure you are going about it correctly when you make your final payment.

No matter where you live, it would be best to get a written notice when you make your final payment. Depending on the lender, this will either come in the mail or through electronic means. Keep this documentation, as you will most likely need it to transfer the title to you as the sole owner.

Title Holding vs. Non-Title Holding State

You should also know whether your state is a title-holding or non-title-holding state.

In a title-holding state, you will get your copy of the car's title as soon as you purchase the vehicle. It will have you and the lender listed as owners, and you will use this to show proof of ownership in any situation that might be warranted. It could include things like getting insurance or any instance where you would have to prove that you are the vehicle's legal owner.

In a non-title holding state, you won't receive a copy of the title until you have made all the payments on the loan. The lender will hold onto the title for the loan term.

Because of this, the lender will take care of the process of getting you a new title when the time comes. It makes everything easier for you but it may take longer while it goes through all the channels.

What is a Lien on a Title?

The title will have a lien when you purchase a car with an auto loan. A lien means that there is another owner of the vehicle aside from you as the primary driver. It means the bank owns the car while you still pay it off.

A lien on the title can also mean that another institution can claim ownership of the vehicle, such as a court or law enforcement agency, depending on the circumstances. Before claiming that you are the sole owner of a car, you need to get all liens off the car's title.

How to Get Your Title if There Is a Lien on It

If there is a lien on your title and you want to take it off after making the last payment, you will have to apply for a duplicate title from your state's vehicle registry. That will require you to bring all the documentation relating to your last payment to the agency and wait for the new certificate of title.

It can take anywhere from a few business days to 30 days, so it is important to factor this time in. If you plan on selling the vehicle as soon as you make the final payment, be aware that you may have to wait until you receive the title, with you listed as the sole owner.

Find the Lien Holder:
In some cases, you may need to find out who holds the lien on your car. Sometimes, institutions will merge or go out of business while you are paying off the loan. And it can make it challenging to find the lienholder and get the finalized paperwork after you have paid off your loan.

Fortunately, there are ways that you can find out what institution is holding the lien and work with them to get them removed.

Checking with your state's vehicle authority will always be your best bet when searching for the official lienholder of a vehicle. That will be especially helpful if you purchased a car and got a loan through a dealership that has merged with another dealer. This sort of merger always happens, so new information should be readily available. Sometimes, you can even enter a car's VIN, license plate number, or your information to see who has your loan on file and who to contact to get the lien off the title.

Get a Lien Release:
Depending on the institution that gave you the loan, you may receive a release of the lien in the mail after you make your final payment. Using this document, you can now apply for a new title for the vehicle.

It may take several business days for you to receive your lien release, but you can always check with the institution to make sure that the process has begun. Generally, though, the release will be sent once the final payment has cleared and everything has finished on their end.

Notify Your Insurance Company:
Once you have made the final loan payment on your car, you should notify your insurance company that you will be the sole vehicle owner. Most of the time, your insurance policy will list the lienholder and the driver on the policy.

Getting them off the insurance policy will ensure that you won't run into any issues should you have to use your insurance coverage in the future.

How to Get Your Title if Your State Uses an Electronic Lien and Title System

You can get your new title in some states using the Electronic Lien and Title system, or ELT. This system uses information from credit unions, banks, and dealerships to automatically update vehicle titles and ensure that everything is up to date with the vehicle registry. It will make the process of getting a new title as easy as possible and reduce the number of steps you must go through when you make your final payment.

If you live in a state that uses this system, you will not have to worry about getting a lien release and going to a DMV after you make your final payment. Instead, the ELT system will send the information directly to the vehicle department, and you will get your new title directly in the mail. Remember, though, that this process will still take several business days, so you should account for that when making plans related to the vehicle.

States That Use the ELT System:

As of 2023, 26 states are using the ELT system. These states include:

  • Arizona
  • California
  • Colorado
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Iowa
  • Kansas
  • Louisiana
  • Maryland
  • Massachusetts
  • Michigan
  • Nebraska
  • Nevada
  • New York
  • North Carolina
  • Ohio
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Texas
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin

Why is a Car Title Important?

A car title is a document that includes information about the vehicle and the owner. This document is the most significant proof of ownership of the car and contact information for the person in case of an emergency or legal issue.

Generally, a title will include information like the vehicle identification number (VIN), the make, model, year, and, sometimes, mileage at the time of an ownership change. This way, law enforcement, the Department of Motor Vehicles (DMV) or similar agency, and other institutions like car insurance companies can have proof of ownership for any vehicle at a given time.

When you purchase a vehicle using a loan, a new title will be issued, but you will not be the only owner listed on the title. The bank, dealership, or other lender will also be listed as a co-owner. Because of this, you can not do anything like sell the vehicle without seeking the permission of the co-owner of the car. Once you pay off the loan balance, you must replace the current title and get a new one with you as the only owner. The process for doing so will change from state to state, and knowing what to expect is essential.

Paying off your auto loan can be a positive prospect and a significant weight off your shoulders. If you have been paying off your vehicle for a long time, having that financial burden done with can open up all kinds of possibilities.

However, paying the remainder of a car loan doesn't mean the vehicle is legally yours yet. You must do some things with the state's vehicle agency and the lender to ensure you get all your paperwork squared away to put the car in your name.

A vehicle title is a document that proves you have legal ownership of a car, truck, or SUV. Without a paper title, you may not be able to get an auto insurance policy, register the vehicle in your name with the Department of Motor Vehicles, or sell the car further down the line.

After making the final payment on a vehicle loan, knowing the steps for getting the updated title with you as the sole owner without the financial institution or credit union you borrowed from is essential. Understanding the process and how it might change from state to state will help you navigate it and get the necessary paperwork.

Final Thoughts

Making the final payment on an auto loan can be rewarding and open up some financial freedom you may not have had before. However, ensure you complete the process correctly and that all the paperwork is in order. Knowing how to get your new title after paying off a loan will ensure that you don't run into any legal issues down the line.