Removing a Lien in Indiana
Once you’ve paid off your car loan and become eligible for a lien release, it’s time to work with your lienholder and the Indiana Bureau of Motor Vehicles (BMV) to apply for a clear car title. We’ll go over that process and all aspects of your lien on this page.
What Is a Car Lien?
A car lien is a legal interest in your vehicle.
The most common time there will be a lien on your car title is when you borrow money to buy the vehicle. The individual or financial institution that issues you the auto loan places a lien on the car title, making them the lienholder and legal owner of the vehicle. Once you pay off your auto loan, you can have the lien removed and become the car’s official owner.
Other Types of Liens
While the most common type of car title lien occurs when you borrow money to purchase a car, there are other times a person or business might place a lien on your title, including, but not limited to, when you:
- Fail to pay for services such as:
- Repairs, towing or impounding, and storage or warehouse.
- Use the car as collateral in a transaction.
During these situations, the lienholder and your local BMV agent can explain the process to remove the lien.
Who Is a Lienholder in Indiana?
When you have a lien on your title because of an auto loan, the individual or business that gave you the loan is the lienholder.
Generally, a lienholder is a bank or some otherfinancial institution, but depending on your situation your lienholder might be an individual who gave you a personal loan or even the car dealer from whom you bought the vehicle.
Even though your lienholder is the vehicle’s legal owner, you’ll keep possession of the car as long as you make payments on your auto loan; either your lienholder will keep the title until the loan is paid off or you’ll hold onto the title with an indication that there’s a lienholder involved.
If you fail to make the required loan payments, your lienholder can repossess the vehicle, which can do a lot of damage to your credit and future car-buying experiences.
Once you pay off your auto loan, it’s time to have the lien removed.
Remove a Lien from an IN Car Title
To remove a lien from your car title, you’ll first need to determine which document you need; this depends on whether your lienholder is a/an:
- *Financial institution or dealer:
- The lienholder will send you the car title with the lien release section completed OR a lien release letter (if you held onto the vehicle title).
- Individual — take one of the following steps:
- The lienholder will complete the car title’s lien release section for you.
- You will obtain a notarized lien release letter from the lienholder.
- You will have the lienholder complete the General Affidavit (Form 37964) stating you’ve satisfied all aspects of the lien.
Next, head to your local BMV office with:
- The applicable lien release document.
- Your valid Indiana driver’s license.
- The $15 title fee.
A BMV agent will process the paperwork and issue you a clear vehicle title, making you the legal owner of the car.
*NOTE: If the financial institution or dealer is no longer in business, head to your local court and obtain a court order requiring the IN BMV to release the lien. Be prepared to show proof you’re eligible for a lien release (i.e. proof you’ve paid off your car loan).