Many people wish to buy a new car, but not everybody has all the money necessary to make the purchase. Thus, people opt for car title loans without a clear title in Phoenix that will lend them the sum of money they need to purchase the car they want, while they’re left to pay monthly rates until all the borrowed amount is covered. But, it is worth knowing that a car bought with the help of financial services is not your property until you manage to pay all the money you loaned to get that car.
So, Whose Car Is It Then?
The car is partially yours and partially belongs to the lender, a lien applied on the title of the vehicle attesting the fact that you’re still paying for it. But, what does a lien title mean? We will talk more about this subject in the following lines, so you will know what it means and how to get rid of it, before purchasing a car. This way, you will make an informed decision that comes in your benefit.
What Does a Lien Title Mean?
A lien is a sort of guarantee on behalf of the lender that will help the lender receive full payment from the person that bought a car before transferring the property title to the purchaser of the car. So, in this case, the vehicle you are driving is not yours, although you do pay for it. Of course, you shouldn’t panic, because no one has the right to take the car away from you as long as you pay the loan as agreed with the lender and as stipulated in the financing contract. If you respect these rules, no one will ever bother you. Thus, when you think about what is a lien title in the case of your car, you should know that it is a form of insurance that will give some peace of mind to the lender and oblige you to respect your commitment to making payments for the car, according to the conditions of your loan.
What Is a Lien on a Car Title?
It is something that gives the lender the power to take your car if you fail to pay the rates as agreed in your contract with the lender. It may sound harsh, but it is the only way the lender will get its money back from clients that are no longer able to pay their loan. Also, due to the presence of the lien on the title of your car, you do not have the right to sell the car, and therefore transfer the property title to another person. You see, if you are not the rightful owner of the vehicle, you cannot sell it, at least not until you pay the entire loan and have the property title transferred to you. While most liens are connected to car financing options, there are other types of car liens out there. There are liens issued by Child Support, liens that appear due to court fees and fines, and liens granted by mechanics, for significant repairs done to your car. In these cases, if you fail to solve your issues and pay what you must pay, according to the conditions issued by the lienholder, you may risk losing your car.
Who Can Issue a Lien on My Title?
The lienholder, as mentioned before, is the person or entity, usually a financial institution, which is responsible for the creation of a lien. So, in case you are wondering what a lien is and who issues one, in most of the cases, the banks and other firms that provide Phoenix title loans near me are the lienholders, although courts of law, the law enforcement, and mechanics can take the role of lienholder in some situations. Practically, in any of these cases, your car will become the guarantee that you will succeed in paying your debt toward the person or company that gave you credit. The lien will oblige you to follow up with the payment while becoming an insurance policy for the lienholder.
How to Pay off Your Lien
Luckily, a lien on a car title will not last a lifetime. As soon as you manage to pay your loan or debt, you will be able to remove the lien from the title of your car and transfer the property title to you. At this moment, you will be the sole owner of the car and will have full rights over the vehicle. When you manage to pay a lien entirely, you will receive two types of documents from the lienholder, which are the Arizona vehicle title, in this case, and the lien release, which is the proof that the lien has been lifted from your car’s title. The lienholder should provide these documents in 5 business days, once you have completed the payment of the loan. But, in case 15 days pass and you receive no materials from the lienholder, you can ask the Arizona Motor Vehicle Division to grant you an administrative hearing, for solving your lien issue.
What Happens If I Buy a Car with a Lien?
While selling a car with a lien on its title is a bit more complicated because whoever has the car does not own it, it can be possible. But, you need to know that once you buy a car with a lien on its title, you also agree to pay the remaining debt in the account of that car. In other words, if the person that sells the vehicle to you still have payments to make to a lender, it will be your duty to complete those payments once you get the car. So, besides paying for the car, you will also have to continue paying the debt created by the financing of the car. Of course, you won’t be the owner of the car until the lien has been entirely paid, so if you fail to make the necessary payments, the vehicle can be taken from you by the lienholder. Therefore, cars with liens on their titles are usually much cheaper than cars that don’t have liens connected to their titles. Thus, do be careful when purchasing a car and do have this aspect in mind because a lien can mean a couple of years in which you will have to make monthly payments to pay up the debt.