What Is a Lien-Free Title?
If you’ve heard the term "lien-free title" while exploring car loans, you might be wondering what it means. Understanding this term is important if you’re thinking about getting a loan using your car’s title. Let’s break it down in simple terms.
What Is a Title Loan and Why Is a Lien-Free Title Important?
Title loans are a type of secured loan that allows you to use your vehicle’s title as collateral. To qualify for a title loan, having a lien-free title is usually required, as it proves your ownership and clears the way for lenders to place a lien temporarily while you repay the loan. If you’re looking for fast cash in Arizona, understanding what a lien-free title means can help you determine your eligibility for a title loan.
Understanding a Lien-Free Title
A lien-free title means you fully own your vehicle, with no outstanding debts or claims from lenders. This clean ownership is crucial if you’re interested in a title loan, as it allows lenders to place a lien on the title temporarily in exchange for a cash loan, which you repay over time.
Here’s what you need to know:
- Ownership: A lien-free title shows you own the car outright. This means you have no outstanding loans or debts connected to it.
- Loan Amount: The value of the car isn't considered when you get a lien-free title, but you need to make sure all debts are cleared.
- Repayment: You don’t need to worry about paying off any remaining debts when you have a lien-free title.
Why Is a Lien-Free Title Important for Title Loans?
When you have a lien-free title, lenders see it as a green light for a title loan application. Here’s why it matters:
- Selling or Trading: A lien-free title lets you easily sell or trade your vehicle since there’s no claim on it.
- Borrowing Power: With a lien-free title, you can use your vehicle as collateral to access higher loan amounts quickly.
What Is The Purpose Of A Title?
Now that you know what a lien-free title is, you need to know what the purpose of the title even is. A car title is a legal document that denotes the official owner of a car. If you bought a car from anyone or any dealership, you should have also received a title for that car. It's an absolutely mandatory document, and naturally, crucial for certain types of loans – especially if you plan to use it as collateral.
However, even if you drive a car, you may not have a title for it in your name. For instance, if you are still paying off a car you bought from a dealership, the title might officially be in the dealer's name, not yours. And if you buy your car from an individual and they can’t – or won’t – give you the title, this is a big red flag that something is wrong and you should immediately turn away from the deal.
How To Get a Lien-Free Title for a Title Loan
- Pay Off Your Loan: First, you need to pay off any loans or debts tied to your car.
- Get a Lien Release: After paying off your loan, ask your lender for a lien release. This document proves that the debt is fully paid and that there’s no lien on your car.
- Update Your Title: Take the lien release and your car title to your local DMV. They will update your title to show that it’s lien-free.
How Do I Know If I Have A Lien-Free Title?
Your title is lien-free if there are no debts against it or you’ve just paid off the debts against it and the lender has removed them. So, if you are not paying any sort of debt related to your car, it's probably lien-free. This means that the car is not being used as collateral for any type of loan nor are you still paying it off.
It's important to also keep in mind that the vehicle must be owned by you, legally. Say, for instance, that a family member had a fully paid-off car with no debts against it. You could not put up that car title as collateral, because you are not the legal owner of that car. The family member who is the legal owner would have to apply for the loan. The car must be legally owned by you, and the title must have no debts against it. Both of these must be true if you want to apply for a title loan.
Check Your Title Status
To check if your title is lien-free:
- Make sure you’re not making any payments related to the car.
- Ensure that the title is in your name, and no debts are linked to it.
What Loan Do I Need A Title For?
By now you must have noticed that when you talk about a lien-free title, you are also talking about a title loan. The only way to get a car title loan is if you have a lien-free title. Now, when it comes to a car registration loan, you don’t have to have a lien-free title. This is because we are using your car’s registration as collateral instead of the car’s title. So if you were still making payments on your vehicle or your title was not lien-free, you can apply for this loan instead.
For either of our loans, the process begins when you fill out the online form. Make sure you check specifically which loan you want. From there, one of our loan representatives from the nearest Arizona car loan location will contact you. They will set an appointment for you to either come in or meet them somewhere else to continue the process for either loan. If you are approved for either loan, you could get the money on the same day or the next.
Make Sure Your Title Is Lien-Free Today
As this guide shows, it is important you understand your vehicle title and that you know how to determine if it is lien-free. Besides getting a loan, it is important you have a lien-free title for various reasons. So make sure you take a look at your title and find out where you stand.
If you need a loan and your title is lien-free, fill out our online form. If your title isn’t lien-free, check out our car registration loans instead. We’ll guide you through the process and help you get the funds you need.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.
