If you still owe money on your vehicle or have lost the title, you still can take steps to trade it in at a dealer. The appropriate process will depend on a variety of factors, including the existence of a lienholder on the title and whether the ownership of the vehicle was transferred to you or is still on record in the name of the seller.
Order a Replacement Title
If the title was transferred into your name when the vehicle was purchased but has since been lost, you can apply for a duplicate copy of the certificate of title with the DMV. This process differs between states, but generally requires an application for a duplicate title, a valid identification of the vehicle owner, a copy of the registration and a fee for the replacement. If the title has disappeared and ownership was never transferred, you may be able to go back to the previous owner and ask him or her to order a duplicate certificate of title.
Have the Dealer Order a Duplicate Title
Depending on the state, you may be able to have the auto dealer you’re working with submit the paperwork to get a duplicate title. For example, in Massachusetts
Pay off the Loan
When a vehicle is financed, the lender will usually hold the title and be listed as a lienholder. To get the certificate of title in that scenario the owner will need to pay the loan in full, either by making all scheduled payments or paying a lump sum. To make a lump sum payment, the vehicle owner should contact the lender to find the total amount due on the day the payment will be received to make sure all prorated interest is covered.
Once the loan has been satisfied the lender will either send a paper copy of the title and release papers to the owner, or send an electronic notification the DMV, depending on state protocols. The paper title and required documentation can be turned in to the DMV to remove the lienholder, while an electronic notification will start the process automatically. In both situations, the title will be mailed to the vehicle owner.
Have the Dealer Pay the Lienholder
If you can’t pay off the loan on a car you intend to trade in, the dealer may be willing to take the sales proceeds that exceed the value of the car that you are trading for to satisfy the lien and release the title. If the proceeds from your vehicle can’t pay off the loan in full, you will have to make up the difference to release the title. Having the dealer confirm with the lienholder that the loan will be vacated and that the lien will be released can ensure a clean transfer of the title, which can help to finalize the trade-in with a single visit. If you’re planning on having the lien paid off in this manner, call the lender for the loan balance and do some research on the value of your car so that you’ll have a general idea of how the transaction will work and whether you will need to write a check to pay off the loan.