Removing a Lien in Iowa

If you financed your car when you bought it and are still paying off your car loan, there may be a lien on your car title. That means from a legal standpoint the car doesn't belong to you.

Once you've finished making payments on the car, you can have the lien removed and the title transferred to your name by the Iowa Department of Transportation (DOT).

What Is a Lien?

A lien is similar to an insurance policy for a property owner. It's a legal document ensuring an owner that he or she will be compensated for their property in the event that the buyer fails to make full payment.

A lien on a car title is an aspect of a car loan. It gives the lienholder the legal right to repossess the vehicle should the buyer default on his or her loans or cease to make payments. Another facet of the car loan may give the lienholder final say in the level of car insurance that must be placed on the car throughout the time the loan is being paid off.

Who Is a Lienholder in Iowa?

The individual or institution responsible for writing your car loan is the lienholder on your car title. Many times, the lienholder will be a bank, credit union, or financial firm. Until the car loan has been satisfied, the lienholder can also be referred to as the legal car owner.

A lienholder may retain possession of the car title and the lienholder's name may also appear on the document until your car loan has been paid in full.

Removing a Lien from an IA Title

Once you pay off your car loan, you'll need to remove the lienholder's name from the title. In Iowa, this could happen:

• Electronically.
• On paper.

Electronic Liens

If your lienholder is a participant in the DOT's electronic liens program:

• The lien will simply be removed electronically.
  • The lien-free title will remain electronic, unless you request a paper title.
    • The county treasurer will mail you the paper copy upon request.
• The DOT provides a list of participating lenders.

Lien-Free Paper Titles

If your lienholder is NOT a participant of the electronic lien program, you can apply for a lien-free Iowa vehicle title by visiting your local county treasurer's office in person and:

• Provide the vehicle title and a copy of the completed Cancellation of Security Interest (Form 411168) from the lienholder.
  
  • The lienholder will forward the cancellation form to the Iowa DOT.
• Complete an Application for Certificate of Title and/or Registration (Form 411007).
• Make a note of the cancellation on the vehicle title, if not already done by the lienholder.
• Pay the $25 fee.

NOTE: If the lienholder fails to deliver the original title to you after completing the cancellation form, you will need to have the cancellation form notarized to obtain a replacement title.

If you have any specific questions about lien releases in Iowa, contact your lienholder or the IA DOT directly.