When purchasing a car using credit, the lender becomes a co-owner by placing a lien on the vehicle. This ensures that the lender can take possession of the vehicle if you fail to pay back the loan. A lender can be a bank or other financial institution, or it can be friend or relative. But you can remove the lien holder and get a new title after paying off the loan.
Check your state Department of Motor Vehicles (DMV) requirements for getting a clean title after paying off the car (see links to state DMVs in Resources). Most states list this information on their website, along with a telephone number for any questions. States vary with regard to the process you must follow and may or may not charge a fee for this service. For example, in Wisconsin, it is your responsibility to supply all required information either by mail or in person. There is no fee if you mail the information but there is a counter fee if you appear in person. In Montana, the lender must submit the loan payoff confirmation and you must mail in the original title and fee. There is no option for appearing in person.
Obtain proof of loan payoff. If your state requires that you send in proof of loan payoff, you will receive either a Confirmation of Security Interest form, a letter on company letterhead stating the loan is clear, or loan papers stamped “Paid,” along with the date and signature of the individual releasing the loan.
Collect all required information. Most states do not have a form you need to fill out, but you will need the original title, loan payoff information, and any required fees. If you cannot locate the original title, you will need to apply for a duplicate, or replacement title. If your state requires the lending institution to send in payoff information, avoid processing delays by contacting the lender to ensure this step is complete before sending in your title.
Mail the information and fee, if any, to your state DMV or appear in person if you have that option.
