Hold the phone… Are you coming up on your last car payment or recently made your last one?? Congratulations! I know you're ready to say “I officially own my vehicle!”
Before you start the celebration, you need to make it official by getting your car title from your lender.
Payment-wise, yes! But your car’s title needs to reflect you’re the sole owner of the vehicle, and any liens your lender (who is the lienholder) has had on your vehicle have been or should soon be lifted.
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I’ll point out the next steps when receiving your title and point out the things you’ll need to do now that your loan is paid off, like checking your credit score, contacting your insurance company to inform them of the change, and more.
Your car’s title is either physically held by the DMV, or in an electronic form - called an Electronic Lien and Title (ELT) - in states where an ELT is legal proof of vehicle ownership.
Once there’s no longer a lien on your vehicle, the DMV is the one who prints and mails the lien-free title to you. Psst… you may be able to pick up your lien-free title at your local DMV location. Contact your lender to learn when they’ll send the DMV the lien release.
Once your last payment on your auto loan is posted to the account, proving that the entire loan is paid off, your lender should process the lien release and immediately inform the DMV. The DMV will then print and mail the official lien-free title document directly to you.
Psst… Make sure your address on file with the lender is up to date so the title is sent to your current residence.
How long it takes to get your title mailed depends on how you pay your auto loan. Let's say you paid with a personal check - the lender may hold the title until that check clears and posts to the account. It may take a few days to process before the lender can proceed in doing a lien release. If you paid with cash or have a direct deposit or do a wire transfer to make your last payment on the auto loan account, the lien release is done immediately.
QUICK TIP: Some lenders place a hold on the borrower’s account for 7 - 10 calendar days until they process the request with the DMV. You can contact your lender to learn how long it takes before they contact the DMV. |
According to the North Carolina Division of Motor Vehicles, it takes 10-15 business days for a title application to process. They also offer expedited titling services where titles are processed and issued the same or next business day.
When your title arrives in the mail, place it in a safe location. Some may place it in a safe deposit box, others might store it in a safe location at home. Wherever you decide, make sure you’re able to access it in case you may want to sell your car and will need to do a title transfer.
Some states (like California or Nevada) don't require you to register your vehicle and have a new title for that state. But for the state of North Carolina, you do. According to the Official North Carolina DMV website, new residents who plan to operate a motor vehicle must get a North Carolina driver's license and title as well as register their vehicle with N.C. Division of Motor Vehicles.
QUICK TIP: If you're not in the state of North Carolina and you're moving to a state where they might require you to change your title, it's always best to contact your local DMV. A good motto to live by in situations like this is when in doubt - find out. |
Contact your insurance company and let them know there is no longer a lienholder or loss of payee on the policy. That way if anything happens in the future, they will know that any money will go to you and not the lender. You may also want to look at different coverage options and receive a better rate on your insurance now there isn't a lienholder.
Loss of Payee: The party to whom the claim from a loss is to be paid. A Loss of Payee has a legal right to collect payment in the event of a claim. |
In a previous article, What's the Most Important Thing to Understand About Credit Scores, I talked about closing loan accounts like a credit card can decrease your credit score. Well, auto loans count too! Anytime a loan is paid off there’s a drop in score because a tradeline was closed. You also have the impact of the loan no longer reporting to the bureau, which means you're not actively increasing your score.
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When it comes to budgeting, your financial plans are ever-changing and this is the perfect time to go back and review and rework your budget! You can put more money towards another expense, add it back into your savings account, or pay another bill. If you need help reworking your budget, download the Smart Budgeting Guide to help:
Psst… If you don't have a budget, you can always create one. Check out this article on the Basics of Building Your Budget to get a head start. |
Now that you have some extra funds at your disposal, there are ways you can use that extra cash like saving to reach a goal and rework your budget. (Not to mention, you could also save money on your insurance.) Make sure you contact your insurer and let them know of that change.
If you haven't received your title in 2 to 3 weeks, contact your lender to make sure they released the lien on your auto loan and informed the DMV. You can also contact the DMV just in case the hold-up is happening on their end.
Our Customer Service Representatives are here for you here and ready to assist! You can get in touch with us here, call us at 704.375.0183, or visit any of our branches.
