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Fast Title Lenders > Title Loan FAQs > What is a Lien?

What is a Lien?

Title Loan Lien
A lien is usually added by the lender to your title during a car title loan.

As you search for a car title loan you will most likely see the term “lien free title” as a requirement. This is a common title loan requirement. So, as a result, frequently asked question is “what is a lien?”

A lien is a security interest placed on a piece of property by the lienholder. In this case the property is the vehicle and the lienholder is the title lender. There are also other vehicle lien types; making sure your title is lien free is recommended prior to applying for a car title loan. You can also get a title loan with a lien is some cases.

Other Vehicle Lien Types

There several other types of liens that can be placed on vehicles including:

  1. Mechanic Liens
  2. Storage Liens
  3. Insurance Liens

Mechanic Liens

Mechanics Lien for Title Loan
Mechanics liens can occur when a repair is not paid for.

A mechanic can place a lien on a vehicle should you take the vehicle to a mechanic, have it repaired, and fail to fully pay for a repair. To cover their costs the mechanic can place a mechanic’s lien in the vehicle.

To remove a mechanic’s lien the vehicle owner will need to pay the repair cost and any storage or other related fees or charges owed to the shop.

Storage Liens

Storage Lien for Title Loan
Towing and storage companies can put liens on vehicles to recover unpaid fees.

A storage lot or towing company may place a lien on a vehicle. These usually occur when you either get in a car accident and have the vehicle towed and stored or have the vehicle impounded for various other reasons.

These can also occur if you park your vehicle in a no parking zone, at a store parking lot for longer than a day, or any other reason where the vehicle is towed and stored. If you fail to pay the cost associated with towing and storage, the company may place a storage lien on the vehicle to recover their costs.

To remove the storage lien, similar to the mechanics lien, you will need to pay the costs owed to the storage company. In some cases, the company will auction the vehicle off to recover their costs if you go long enough without working out a payment with them.

Second Liens

A second lien is when an additional lender records a lien on a vehicle title when there is an existing lien for a loan that is not fully satisfied. While second lien title loans are possible, they are rare. It is much easier to simply repay the original loan prior to getting a title loan.

Any of the above liens added to a vehicle with an existing loan, including a title loan, would be a second lien.