Car liens serve as an insurance policy that enables your creditor or lender to assume possession of your car while you are still indebted. In case you default and fail to pay, it gives your creditor or lender the legal right to repossess your car. The lien is what makes you take responsibility for paying the loan using your car as collateral.

Lenders put a lien on the car title to ensure they have the right to repossess the car in case the borrower defaults, this means that they have to be paid first if the car is sold. The collateral is what secures and guarantees that your lender will be able to recoup their money.

If there is a lien on a car, it means that there is an embargo on that car that may resist the way you use the car and what you can do with the car. This means that, if there is a lien holder on your car, you cannot sell the car and you cannot use the car to secure a loan.

Having a lien on your car means that you do not own the free and clear. To own the car free and clear you need to pay off the loan on the car. As soon as you pay off the loan on the car, your lender will release the title to you and they will also give you a lien release letter in the letterhead of the loan company to show that you have paid off the loan.

If you wish to sell a car that you have a lien on, the first thing you need to do is to pay off the loan. If you don’t have enough to pay off the loan, you can liaise with your buyer and your lender such that you use the money from the buyer to pay off the loan.
It is after this you can transfer ownership to the new owner.