While you are paying off your car loan, your vehicle is legally owned by another party, which is usually your lender. But once you’ve made the final payment on your loan, you can get the title from your lender, and become the full owner of your car.

The process of getting a car title varies a little by state, as does the timescale for receiving an updated title after you make your application. You should start the process as quickly as possible, however, because having the title in your name gives you important rights over your vehicle.

Key Takeaways

  • The process for getting your car title varies by state.
  • In most states, your lender will update the information held by your state DMV, and you’ll be sent an updated title automatically.
  • In some other states, you’ll be sent a lien release document, which you should take to your state DMV to apply for an updated title.
  • Getting your car title can take between two and six weeks.

What Is a Car Title and Why Is It Important?

A car title is a legal document that shows who owns a vehicle. When you take out a car loan, the car title will normally show that your vehicle is legally owned by your lender. This indicates that your lender legally owns your car until you finish paying off your loan.

Car titles are important because it can by very difficult to sell your car if the title isn’t in your name. The car title also shows who is liable for any infractions or issues that involve the car. Because of this, if you don’t have the proper paperwork for your car, you could run into serious issues or be fined.

Electronic Titles

Many states use an Electronic Lien and Title system, sometimes called ELT. This is a database that connects dealerships, credit unions, and lenders, and allows the Department of Motor Vehicles (DMV), or Motor Vehicle Administration (MVA), to always have up-to-date information on who owns the cars in the state.

If your state uses an ELT, the process of getting title on your car is easy. Your lender will update the ELT for you, and a new title will be sent to you automatically.

What Is a Car Lien?

A lien is a legal claim on an asset that is used as collateral to satisfy a debt. Liens are used for both car loans, but they can be used for other types of loans such as mortgages.

When you take out a car loan, your lender will have a lien on your car until you finish paying off the loan. It’s a legal document that says that if you fail to make your loan payments on time, your lender can take possession of your car. Once you finish paying your loan and transfer the title, your lender will no longer have a lien on your vehicle.

How To Get The Title After Paying Off a Car Loan

The process of getting title on your car varies by state. Some states use an ELT, which makes the process easy. In other states, you will have to do some paperwork. You should check the DMV website for your state before you finish paying off your loan, so you know which laws apply to you.

If you live in a state with an ELT, your lender should update this for you, and you’ll automatically be sent a new title. This may take up to a month, because your lender might have a backlog of releases to process. If it takes longer than this, you should contact your lender.

If your state doesn’t use an ELT, you will have to do some paperwork. The exact process will vary depending on whether you live in a non-holding or title-holding state.

Title-Holding States

In title-holding states, you will be given a copy of the title as soon as you take possession of your vehicle. This title will have both your name and the name of your lender on it. The lender will hold the title and you will be given it once the lien is satisfied. You are then responsible for updating the document once you pay off your car loan.

In this case, your lender should send you a lien release once you make your last payment. Again, this can take up to 30 days, and if it takes longer you should contact your lender. You should check your state DMV’s website to find out where you need to take this letter – this will be either the office of your state BMV or DMV, or in some cases to your local city or town clerk’s office. There, you can use it to apply for an updated title on your car.

Non-Holding states

In non-holding states, the lender keeps the title document for the entire length of your loan. Once you pay off your loan, the lender will send the lien release to the DMV, who will then send you an updated title. This makes it easier to get the title for your car, but because there are more steps involved it can take longer. 

How Long Does It Take to Get the Title After Paying Off a Car?

The time it takes to get the title after you pay off a car varies. If your state uses an ELT, you will normally receive the title to your car within a month of making the final payment. If you live in a title-holding or non-holding state, it really depends on how quickly your state DMV processes the paperwork.

In general, you can expect to receive your new title anywhere within two to six weeks of applying for it. You should keep this timescale in mind if you are going to sell the car, because this may be difficult if you are waiting for the document to arrive.

What to Do If You Can’t Find the Lien Holder

In some cases, a lender will merge with another organization, or will change names midway through your loan. This can make it difficult to determine who to contact if you are experiencing delays.

The best approach here is to check with your state DMV. They will likely have a list of lenders on their website, and you can check to see if your lending company is listed as a subsidiary of another, or if they’ve recently changed their name.

In some cases, you can even enter your car’s vehicle identification number (VIN) on your state’s DMV website to see who has the current lien on the title. You can then contact this company to find out about your new title.

What Else Should You Do Once You Pay Off Your Car?

Paying off your car can be a positive time. Not only do you then own your car outright, but you can also stop making car loan payments.

It’s also a good time to take stock of your finances, and check how paying off your loan will affect them. In particular, you should:

  • Check your credit score: Paying off your loan can affect your credit score in different ways. You should check your credit score, and report an errors.
  • Look into insurance options: When you own your car, you might be able to get a better rate on your car insurance. You should contact your insurance company to let them know they can remove the lien holder from your policy. Ask if they can give you a better rate. If not, shop around and see if you can save more.

When Financing a Car, Who Has the Title?

When you get a car loan, your lender will generally keep the car title until you finish paying the loan. Then, you can transfer the title to your name.

How Can I Check If My Car Loan Is Paid Off?

To check if your car loan is paid off, you can contact your lender. You can typically check your balance online. Your lender is in the best position to tell you how much you owe on your car, and when they will transfer the title to you.

How Can I Prove That My Car Is Paid Off?

Once you pay off your loan, your lender will send you an official release of lien letter. Take that letter to your state’s department of motor vehicles office (or, in some cases, to your local city or town clerk’s office), and they’ll issue you a car title in your name.

Can You Get a Title on a Car That Is Not Paid Off?

It’s possible to get a title on a car that is not paid off, but it’s complicated. You’ll have to contact your lender and ask them to release their lien on your car, which they are not obligated to do.

What Are the Benefits of Having My Car Paid Off?

Paying off your car loan will give you extra money each month, which you can either save or put towards other forms of debt (like your credit card). In addition, you may be able to get cheaper car insurance after you’ve paid off your loan. Paying off your car loan can also potentially help improve your credit history.

The Bottom Line

The process for getting the title after you pay off your car loan depends on where you live. In some states, you will automatically be sent an updated title. In others, you’ll be sent a lien release document that you’ll need to take to the DMV. This process can take anywhere between two and six weeks, and if it takes longer you should contact your lender.

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