Buying a vehicle with a car loan is a practical solution if you’re looking to get a car with a lower initial cost; however, when it then comes to selling or scrapping that car, things can get complicated.
In this blog post, we will explore the complexities of scrapping a car with a lien and discuss how to get a clear title for the vehicle you no longer need.
What is a Lien?
A car lien is essentially an insurance policy for lenders. When a borrower takes out a loan to purchase a car, the lender retains a security interest in the property until the loan is repaid in full. In other words, the lien is collateral that give the lender the upper hand in the legal battle if you fail to repay your loan payments.
Mechanics also sometimes place a lien upon a vehicle if the owner can’t pay the services that the car needs. Governmental agencies also have the authority to place a lien on a car to redeem unpaid taxes, sometimes seizing and selling the car if needed.
Can I Scrap a Car With a Lien?
No, you can only scrap a car if the lien is resolved. In order to proceed with scrapping, you must either pay off the remaining debt, or negotiate with the lienholder for approval.
Before you scrap your car, it’s crucial that you verify its lien status. By reviewing the title you should be able to see whether there’s an active lien. The lienholder should be listed, so you can contact them to confirm the loan status and request a lien release if the debt is repaid.
Once the dispute is resolved, ensure the DMV has updated your car’s title so that it reflects that it is lien-free. Keep any paperwork from this process so that you can show the scrappers proof that the lien has been addressed before they accept your vehicle.
Can I Sell a Car With a Lien?
No, selling a vehicle with a title lien without the lender’s approval is illegal. This is because the car isn’t entirely yours if the debt isn’t fully paid off.
If you have any questions regarding liens or the car scrapping process, please don’t hesitate to contact us and a member of our team will be happy to help.
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