Removing a Lien in Michigan
Typically, when you finance a vehicle and are still paying off the auto loan, there will be a lien on your car title. Your lender—or lienholder—is the car’s legal owner until you pay off the loan and have the lien released.
With a lien no longer on the title, you can apply for a clear title with the Michigan Secretary of State (SOS), indicating you legally own the vehicle. We’ll go over all this and more on this page.
What Is a Car Lien in MI?
A car lien provides legal protection for auto loan lenders—known as lienholders—financially safeguarding them against the possibility of not receiving full repayment for the loan (in which case, they’d simply repossess the vehicle).
After you pay off your car loan, your lienholder will send you the proper documents to apply for a clear title—one without the lienholder’s name or vehicle ownership.
Other Types of Liens
While the kind of lien placed on a car title due to an auto loan is the most common type, a lien could be instituted for a variety of reasons.
For instance, you could have a lien placed on your title for unpaid vehicle services, such as mechanic repairs, towing, and storage. Other vehicle liens might relate to life situations such as using your vehicle as collateral during a transaction or divorce settlement.
Because these situations are different for everyone, you’ll personally need to consult with the individual or business who placed the lien and an SOS agent when laying down the terms for repayment and car ownership.
Who Are Michigan Lienholders?
Your lienholder is the person or business that issued your car loan.
Usually, lienholders are financial institutions like banks and credit unions. However, perhaps an individual person or car dealer gave you the loan to buy the car; in that case, they would be the lienholder.
Until you pay off the loan, your lienholder keeps the car title and is the vehicle’s legal owner. If you fail to make loan payments, your lienholder can repossess the vehicle, leaving you with a serious dent in your credit history, a tough time getting a future car loan, and no ride.
Remove an MI Car Title Lien
After you satisfy your car loan, your lienholder will send you the car title and a lien release statement.
To apply for a clear title and transfer vehicle ownership into your name, take the following items to your local SOS office:
- The car title.
- A lien release statement.
- The $15 title fee.