A clear lien on your car means you don’t owe any money on your car loan. At that point, you have no more repayments to make and you can sell the vehicle and keep all the profits for yourself. It’s not difficult to pay off the car balance and obtain a clear lien. You’ll find that you actually end up paying less than you think to do it. The big advantage is that you’ll no longer be paying interest on what you owe and there’s no need to calculate car payments.
Step One - Credit Report
The very step when you want to have a clear lien on your vehicle is to obtain a copy of your credit report. To do this, contact one of the three major credit agencies (Experian, Equifax or TransUnion). You’ll find that it’s easy to get, and all you’ll need to pay is the postage. The credit report will tell you plenty of things about your finances, including your car loan. You’ll be able to see how much you owe, how many of your payments have been made on time, and how many have been made late.
When you’re looking for a clear lien, that first figure (how much you owe) is the important one. It lets you know just how much money you need to pay off the loan and end up with a clear lien.
Step Two - How To Pay
Once you know just how much it’s going to cost you, you have to work out what you’re going to use to pay off your car loan. If you have savings, you can dip into those. Maybe you have a retirement fund, and you can borrow from that. You might also have things you want to sell, and you can use the proceeds from this to pay off the loan and end up with a clear lien.
Step Three - The Loan
Contact the lien holder, that is the company with which you have the loan. Tell them you want to pay off the loan, and ask how much you owe. You’ll need to tell them exactly when you want to clear the lien in order for them to calculate the exact figure.
The payoff, as it’s known, will be lower than the figure you received from the credit agency. This is because the credit agency figure is based on the loan going to its full term. By paying it off early you won’t accrue so much interest. You don’t have to order the payoff immediately unless you want to. Be certain you have all the money to do it
Step Four - Payoff
You’ll have an expiration date for the payoff. Make sure you make your payment in full before this time. When that’s done, you’ll need to obtain what’s known as a release of lien from the company. This is a piece of paper proving you’d paid off the loan. Take it to the Department of Motor Vehicles closest to you. They will remove the lien from your auto title, and you’ll now have a clear lien.