Who Can Put a Lien On Your Car 5 Types of Creditors Explained

Worried about who has the power to lock down your car’s title? It’s a stressful situation many owners face.

A car lien is a legal claim a creditor places on your vehicle’s title. This claim is used to secure an unpaid debt you owe. It effectively holds your car’s ownership hostage until the debt is settled.

A car lien is a creditor’s legal claim against a vehicle’s title to secure an unpaid debt, acting as collateral. This guide explains the 5 key types of creditors who can place a lien on your car and how the process works. You will learn exactly what a lien is and how to handle one.

Key Facts

• It’s Not Just Lenders: While auto lenders are the most common lienholders, mechanics, towing companies, judgment creditors, and even the IRS can also place a lien on your vehicle.
• A Lien Restricts Ownership: A lien on your title prevents you from legally selling the car or transferring ownership until the debt is paid and the lien is officially released.
• Liens Require a Legal Basis: A creditor cannot arbitrarily place a lien; they must have a legal justification, such as a signed loan contract, an unpaid invoice for services, or a court order.
• The DMV is the Official Record Keeper: All legitimate liens must be filed with and recorded by your state’s Department of Motor Vehicles (DMV) to be legally enforceable against your vehicle’s title.
• Liens Precede Repossession: A lien establishes a creditor’s legal right to your property. Repossession is the physical act of seizing the car to satisfy that right, making the lien a critical first step.

What Is a Car Lien and Why Is It Important?

A car lien is a creditor’s legal claim against a vehicle’s title to secure an unpaid debt, acting as collateral. Think of it as a formal reservation on your car’s value. This notice, recorded by your state’s Department of Motor Vehicles (DMV), prevents you from selling the car or transferring ownership with a clean title until the underlying debt is fully paid. The creditor who places the claim is known as the lienholder. It’s a powerful tool that ensures they get paid for the money you owe.

A common misconception is that a lien means the creditor owns your car. This isn’t true. You still retain ownership, but the lien acts as an encumbrance, or a restriction, on your property rights. The lien simply gives the lienholder a security interest in your vehicle. If you fail to pay the debt, this security interest gives them the legal right to take further action, which can ultimately lead to repossession. Understanding this distinction is the first step in managing your vehicle’s title and your financial obligations.

What Are the Two Main Categories of Car Liens?

To understand who can put a lien on your car, it helps to know that liens fall into two primary legal categories: consensual and involuntary. The key difference is your permission. This simple framework provides critical context that makes the specific types of creditors and their actions much easier to grasp.

Consensual Liens (Voluntary)
A consensual lien is one you agree to voluntarily. This is the most common type of car lien and is a standard part of financing a vehicle. When you sign an auto loan agreement, you are giving the lender permission to place a lien on the car’s title. You are willingly pledging the car as collateral, which gives the lender a legal security interest until the loan is paid off.

Involuntary Liens (Non-Consensual)
An involuntary lien is placed on your property without your consent. These liens are imposed by law to satisfy a debt you’ve failed to pay. They can be either statutory (granted by a specific law, like a mechanic’s lien) or judicial (ordered by a court after a lawsuit). These are often a surprise to vehicle owners and arise from disputes over payment for services or unrelated debts.

Here is a simple breakdown of the differences:

Feature	Consensual Lien	Involuntary Lien
Origin	Voluntary agreement (e.g., loan contract)	Imposed by law (statutory or judicial)
Owner’s Consent	Given upfront by the vehicle owner	Not required; placed against owner’s will
Common Example	An auto loan from a bank or credit union	A mechanic’s lien for an unpaid repair bill
Legal Basis	Contract Law	Property Law / Court Order

Who Are the 5 Main Creditors That Can Put a Lien On Your Car?

Now that we’ve covered the different types of liens, let’s get to the core question. Several different types of creditors have the legal right to place a lien on your vehicle. Moving beyond the obvious auto lender, this list covers the primary entities you need to be aware of.

1. How Do Auto Lenders Place a Lien on Your Car?

Auto lenders place a consensual lien on your car as a standard part of the financing agreement. This is the most common type of lienholder. When you sign the loan documents to purchase a vehicle, you are pledging the car itself as collateral. This action grants the lender—whether it’s a bank, credit union, or other financial institution—a legal security interest in the vehicle. The lender then records this interest with the DMV, which officially lists them as the lienholder on your car’s title. This lien remains in place until you have made the final payment on your loan.

2. How Can Mechanics and Repair Shops Place a Lien?

A mechanic or repair shop can place an involuntary, statutory lien on your vehicle for unpaid services, parts, and labor. This is often called a “mechanic’s lien” or “artisan’s lien.” This right is granted by state law to ensure service providers are paid for their work. The legal basis is typically the signed work order you approved before the repairs began. In many states, this can be a “possessory” lien, meaning the shop can legally keep your car until the bill is paid. If the bill remains unpaid, they can file for a formal title lien and eventually sell the vehicle to cover their costs.

Expert Tip: To prevent disputes that could lead to a mechanic’s lien, always get a detailed, written estimate before any work begins and never sign a blank work order.

3. When Can Towing and Storage Companies Place a Lien?

Towing and storage companies can place a statutory lien on a vehicle for unpaid towing and storage fees. If your car is towed—whether from an accident, an illegal parking spot, or a breakdown—the company that transports and stores it has a legal claim for payment. Daily storage fees can accumulate very quickly, and if the bill is not paid, the company can file a lien on the vehicle’s title. State laws are very specific about the notification period the company must provide, but if the fees remain unsettled, they are typically allowed to sell the car at auction to recover their costs.

4. How Does a Judgment Creditor Get a Lien on a Car?

This is a critical process to understand because it allows a creditor for an unsecured debt, like a credit card bill or medical debt, to get a lien on your car. A judgment creditor gets a lien on a car only after winning a lawsuit against the debtor in court. The process has three main steps:

1. Lawsuit: The creditor must first sue you for the unsecured debt.
2. Court Judgment: They must win the lawsuit, at which point the court issues a judgment in their favor for the amount owed. The creditor is now known as a “judgment creditor.”
3. Lien Filing: The judgment creditor can then ask the court to enforce the judgment. One way to do this is by placing a “judgment lien” on your assets, which can include a car that you own free and clear.

This is how a seemingly unrelated debt can become a direct legal claim against your vehicle.

5. Which Government Agencies Can Place a Lien on a Vehicle?

Several federal, state, and local government agencies can place powerful liens on your property, including your car, for unpaid obligations. These are typically very serious liens that can be difficult to resolve. The two most common types are:

• The IRS and State Tax Agencies: If you have unpaid federal or state income taxes, the government can file a tax lien. A federal tax lien applies to all of your property, including your vehicle, and gives the government a legal claim to your assets to secure the tax debt.
• Child Support Enforcement Agencies: State agencies can place a lien on a non-custodial parent’s property, including their car, to collect past-due child support payments.

These government liens are powerful collection tools and should be addressed with extreme urgency.

How Does a Creditor Officially Place a Lien on a Vehicle Title?

To officially place a lien, a creditor with a legal claim must submit a formal lien application to the state’s Department of Motor Vehicles (DMV). A lien isn’t official just because a creditor says so; it must be recorded through a specific bureaucratic process to become legally enforceable. While the exact forms and fees vary by state, the general path from an unpaid debt to a perfected lien follows these steps:

1. Establish the Legal Right: The creditor must first have a valid legal claim. This could be a signed loan agreement (for a lender), a signed work order (for a mechanic), or a final court order (for a judgment creditor).
2. Complete State-Specific Paperwork: The creditor fills out the necessary lien application forms required by the state’s DMV.
3. Submit to the DMV: The completed application, along with any required supporting documents and filing fees, is submitted to the DMV.
4. DMV Records the Lien: The DMV processes the request and officially adds the creditor’s name and information to the vehicle’s title record as a lienholder.

For large lenders, this process is often streamlined through a state’s Electronic Lien and Title (ELT) system, which manages these records digitally. Once recorded, the lien is “perfected,” making it a formal, public encumbrance on the property.

How Can You Check if There Is a Lien on Your Car?

The most reliable way to check for a lien on your car is to use the vehicle’s 17-digit VIN (Vehicle Identification Number) on your state’s official Department of Motor Vehicles (DMV) website. This method provides the most accurate and up-to-date information directly from the source. It is a simple process that empowers you to verify your vehicle’s status at any time.

Here are the clear, actionable steps you can take:

1. Find Your VIN: Locate your car’s unique 17-digit VIN. It is typically found on a small plate on the driver’s side of the dashboard (visible through the windshield) or on a sticker inside the driver’s side door jamb.
2. Visit the Official DMV Website: Go to your state’s official DMV or Secretary of State website. Critically, ensure the website address ends in “.gov” to avoid scam services.
3. Use the Online Title Check Tool: Look for an option like “Title Check,” “Lien Search,” or “Vehicle Information Check.” Enter your VIN as prompted.
4. Review the Results: The search will return the official title information, which will list any and all lienholders currently recorded for that vehicle.

You can also check the physical paper title for your car if you have it, as it should list any lienholders. However, the online DMV check is the most definitive method to use, especially before buying a used car.

What Are the Steps to Get a Lien Removed From Your Car?

To remove a car lien, you must first pay the underlying debt in full to the lienholder, then obtain an official ‘Lien Release’ document from them and submit it to your state’s DMV. This process clears the title of the encumbrance and restores your full property rights. It is a crucial final step that some owners forget, leading to problems down the road.

Follow this three-step process to ensure your title is cleared correctly:

1. Satisfy the Debt: Contact the lienholder to confirm the final payoff amount. Pay this amount in full using a trackable method, such as a cashier’s check or wire transfer, and always keep a receipt for your records.
2. Obtain a Lien Release: Once the debt is paid, the lienholder is legally obligated to release their claim. They must provide you with an official document, often called a “Lien Release Letter” or a signed-off title. In states with an Electronic Lien and Title (ELT) system, the lender may notify the DMV electronically.
3. Clear the Title with the DMV: Take the lien release document to your local DMV office. You will need to submit the document and pay a small fee to have a new, “clean” title issued in your name with the lienholder removed.

Expert Tip: Always follow up with both the lender and the DMV. Request your lien release via a trackable method and check your vehicle’s status on the DMV website a few weeks later to confirm the record has been updated.

FAQs About who can put a lien on your car

Can a private person put a lien on my car for a personal loan?

Yes, but only if you signed a written agreement pledging the car as collateral. If there was no formal agreement, they cannot simply place a lien. They would first have to sue you in court, win a money judgment, and then ask the court to enforce that judgment with a lien on your car.

Can a credit card company put a lien on my car?

Not directly, because credit card debt is unsecured. To get a lien, the company must first sue you for the unpaid balance. If they win a court judgment, they can then seek a judgment lien against your assets, including your car, to secure the amount you owe.

Does a lien on my car affect my credit score?

The lien itself does not usually appear on your credit report, but the reason for the lien almost always does. For example, defaulting on your car loan, having a bill go to collections, or getting a court judgment against you will all severely damage your credit score.

Can a lien be placed on my car without me knowing?

Generally, you must be notified, but it’s possible to miss the notice. State laws require creditors to send a formal ‘Notice of Intent to Lien’ or serve you with a lawsuit. However, if they have an old address for you, you might not receive the notification until the lien is already in place.

Is a lien the same thing as repossession?

No, they are different but related steps. A lien is the legal claim on your car’s title that establishes the creditor’s right to the property. Repossession is the physical act of seizing the car, which is the action a creditor takes to enforce their rights under the lien. A lien must exist before a repossession can occur.

Final Thoughts

A lien on your car is a serious legal tool that creditors use to secure a debt. Understanding that it’s not just auto lenders, but also mechanics, towing companies, judgment creditors, and government agencies that can place a claim on your vehicle is the first step toward protecting your asset. A lien fundamentally restricts your property rights and is the legal foundation for repossession.

The best way to avoid an involuntary lien is through clear communication and proactive problem-solving. Always get agreements in writing and address disputes with creditors before they escalate to legal action. If a lien is already in place, the path to resolution is clear: satisfy the debt, get the official release, and clear your title with the DMV. By knowing your rights and the processes involved, you can navigate these challenges and maintain control of your vehicle.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Lien laws vary significantly by state. If you are dealing with a specific lien situation, you should consult with a qualified legal professional in your jurisdiction for advice tailored to your circumstances.