Subsection 5.1: Handling Liens and Lienholders
When dealing with car titles in Illinois, the presence of a lien or lienholder on the vehicle can add complexity to the process of obtaining a duplicate or corrected title. This section provides a detailed guide to navigating lien-related scenarios.
1. Understanding Liens and Lienholders
A lien is a legal claim placed on a vehicle by a lender or financial institution until the loan used to purchase the vehicle is paid in full. The lienholder is the entity that holds this claim.
Common Examples of Lienholders:
Banks
Credit unions
Financing companies
When is a lien removed?
A lien is removed once the vehicle owner has fully paid off the associated loan, and the lienholder provides a release document.
2. Key Scenarios Involving Liens
a. Duplicate Title with an Existing Lien
If a lien remains on the vehicle, the lienholder's information must be included on the duplicate title application. The title will continue to show the lienholder's claim.
Steps:
Obtain written permission or acknowledgment from the lienholder, if required.
Ensure all lienholder information is accurately listed in the "Lienholder" section of the VSD 190 form.
b. Removing a Lien from the Title
To remove a lien, you must provide proof that the lien has been satisfied.
Requirements:
A Lien Release Letter or document from the lienholder.
Must include:
Lienholder's name
Vehicle identification number (VIN)
Statement confirming the lien has been released
Signature of the lienholder representative
Submit this document along with the application for a corrected title.
c. Transferring a Title with a Lien
When transferring ownership of a vehicle that has an active lien, the lienholder’s information must remain on the title unless the lien is satisfied before the transfer.
Note: The new owner assumes the responsibility of the lien unless paid off.
3. Required Documentation
For applications involving liens, the following documents may be required:
VSD 190 Form: Ensure the lienholder information is completed.
Lien Release Letter (if applicable): To remove the lien.
Loan Account Statement: If requested by the state for verification purposes.
Vehicle Sale Agreement: If transferring ownership while a lien is active.
4. Working with the Lienholder
Communicating with your lienholder is essential for smooth processing.
Contact the Lienholder:
Request the necessary documents, such as a lien release letter, well in advance.Provide Accurate Information:
Ensure all details match the lienholder's records to avoid delays.
5. Common Issues and How to Avoid Them
Lienholder Not Responding:
Contact the lender's customer service or escalation team. Be prepared to provide loan account details.Incorrect or Missing Documents:
Double-check that the lien release document includes all required details and signatures.Title Application Rejected Due to Active Lien:
Confirm with the lienholder that the lien has been released and resubmit with updated information.
6. Submitting the Application with a Lien
Once all documents are ready, you can proceed with submitting the application:
Include the lienholder information or lien release documentation with the VSD 190 form.
Follow the fee and payment guidelines outlined in Subsection 4.3.
7. FAQs About Liens and Lienholders
Can I get a duplicate title without the lienholder's permission?
Yes, but the lienholder's claim will remain on the title until a lien release is provided.What happens if the lienholder is no longer in business?
Contact the Illinois Secretary of State for guidance. They may require additional proof, such as loan satisfaction records.How long does it take to remove a lien from the title?
Processing times depend on how quickly the lienholder provides the release and how you submit your application (mail-in or in-person).
By understanding how to manage liens and lienholders, you can ensure the successful processing of your title application, whether you're obtaining a duplicate title, removing a lien, or transferring ownership.
Need Assistance?
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