Can You Sell or Junk a Car With a Lien in Washington?

Every Washington title lists two kinds of owner. Knowing which one you are explains most of what follows.

• Registered owner

  The person whose right to have and use the vehicle is on record with the Department of Licensing (RCW 46.04.460). If the car is parked in your driveway and the tabs are in your name, you are almost always the registered owner.

• Legal owner

  Under RCW 46.04.270, the legal owner is whoever holds a recorded security interest in the vehicle: in plain words, the lender. With no loan on the car, the registered owner is also the legal owner.

• Leased cars

  The same law names the lessor as the legal owner of a leased vehicle. If you lease, the leasing company is on the title, and you need to talk to it before the car goes anywhere.

Why you may not have the title at all

This catches many people off guard. Under RCW 46.12.540, DOL sends the registration certificate to the registered owner and the certificate of title to the legal owner. So while you are paying off a loan, the title usually sits with your bank or credit union, not in your glove box.

That is normal. It also means that “I can’t find my title” and “the bank still has my title” are two different problems with two different fixes. If the title is simply lost and there is no loan, see our page on selling a car without a title. If a lender is involved, keep reading.

Yes. But the lender’s release has to happen as part of the sale, because two Washington rules work together here:

• Washington DOL says vehicles must have a valid title before they can be sold.
• On its Affidavit of Loss/Release of Interest page, DOL says all legal and registered owners shown on the title must sign the Release of Interest for a title transfer.

If a lender is listed as legal owner, its signature (or its own release paperwork) is part of “all owners.” You cannot sign for it, and a buyer cannot take ownership around it. This is true for a running car you sell to a neighbor, and it is just as true for a junk car that is going to be scrapped.

What this means for a junk car

A junk car can still have a loan on it: the car broke down, the repair would cost more than the car is worth, and the monthly payment kept going. The car’s value has dropped, but the lender’s interest on the title has not changed. Before we can tow it away, the paperwork has to show the lender is out of the picture. The good news is that this is usually a phone call and some paperwork, not a court case.

You made the last payment months or years ago, but you never received a clean title, or DOL still shows the bank as legal owner.

Washington law is clear that the lender has to let go. Under RCW 46.12.675, a secured party must release its interest once the conditions of the loan agreement are met and nothing more is owed. It does that by signing the title over to you (or to someone you name) and sending it to DOL with the fee, or by signing it over directly to the person buying the car from you, along with your own release of interest.

DOL’s page on removing a lienholder says that when you pay the loan in full, the lienholder usually sends DOL everything needed to remove its name. When that does not happen, here is what to do.

1. Check your records first

   Look through your mail and files for anything the lender sent after payoff, such as a release letter or a signed-off title. Paperwork from a loan paid off years ago is easy to file away and forget.

2. Ask the lender for its release

   Call the lender’s payoff or title department and ask for one of the two documents DOL accepts: the current Washington title with the lienholder’s releasing signature, or an Affidavit of Loss/Release of Interest signed by the lienholder and notarized.

3. Take it to a vehicle licensing office

   DOL says you can bring either document to a vehicle licensing office to remove the lienholder from your record. Vehicle licensing offices are located throughout King, Pierce and Snohomish counties.

4. If the lender drags its feet

   Under RCW 46.12.675, a secured party that fails to sign over the title or apply for a new one within ten days after a proper demand can be liable to the registered owner or buyer for one hundred dollars, if that failure causes a loss. Put your request in writing and keep a copy.

Once the lender is released, you are both the registered and the legal owner. From there, selling or junking the car works like any other sale.

If there is still a balance, the lender will release its interest only when that balance is paid. So the question becomes: where does the money come from, and in what order do things happen?

1. Get the payoff amount

   Call the lender and ask for the exact payoff amount and how long it is good for. The balance on your monthly statement is not always the full payoff.

2. Get an offer for the car

   For a junk or damaged car, call us for an offer. Your offer depends on the year and model, condition, demand for its parts, weight and size, and towing distance. Now you can compare the two numbers.

3. Ask the lender how it handles a sale

   Washington law lets a lender sign the title over to you, or directly to the person buying the car from you. DOL’s affidavit page also explains that a lender can give the released title or affidavit to a Washington buyer along with the seller’s release of interest. Ask your lender which way it does it and how long its release takes.

4. Pay off, release, then sell

   Pay the loan off and get the lender’s release (the signed title or a notarized affidavit). For a junk car, the payoff usually has to come first, because the release is what lets the car change hands. Then every owner on the title signs the release of interest and the car can go.

This is the hard version of the lien question. A blown engine or a crash can wipe out most of a car’s value overnight, but the loan balance stays the same. When you owe more than the car is worth, the lender still has to be paid before it releases the title, no matter who buys the car.

Questions to work through

• If the damage came from a crash, have you talked to your insurance company about the claim before doing anything with the car?
• Do you have the exact payoff amount in writing, and an offer for the car as it sits today, so you know the real gap?
• Can you cover the gap from savings, or would the lender work out a plan with you? Only the lender can answer that.
• Is the car costing you money where it sits, in storage fees, insurance or a warning from your apartment manager or the city?

Only you and your lender can decide how to handle the loan. What we can do is give you a real cash offer for the car in its current condition. That way you know the true gap before you talk to your lender. For damaged cars, see our wrecked car buyer page. If you are weighing repair, a private sale or a donation, our post on whether to junk, sell or donate a car walks through the trade-offs.

Sometimes the lender on the title no longer exists. Small lenders merge, close or get bought, and a loan paid off years ago can leave a name on the title that nobody answers for. DOL’s lienholder removal page covers these cases.

Start by looking for a successor. When a lender is bought by another company, the new company usually takes over its loan records, and it can sign the release. DOL’s options below apply when the lender is out of business and you can’t find a successor.

• Petition a Washington court

  DOL says you can petition a Washington superior court or district court to have DOL remove the lienholder and issue you a clear title. You must show proof that you paid the lienholder in full. The court order must identify the vehicle by year, make, model and VIN.

• Dealer lenders

  If the lienholder is a Washington vehicle dealer, for example a dealer that financed the car itself, DOL says you can file a complaint with the department instead.

• Out-of-state lenders

  If the lienholder is in another state or country, DOL says you must resolve it there before applying for a Washington title.

DOL lists its title phone line on that page as 360-902-3770 (TTY: 711) if you have questions about your record.

We have been buying junk cars in the Seattle area for over 20 years. If there was ever a loan on the car, the best thing you can do is call us before the pickup, so nobody is surprised on the day.

1. Call or send the form

   Call (206) 941-0612 or send the pickup form. Tell us the year, make and model, and whether a lender was ever on the title. We call you back within 4 hours.

2. We tell you what paperwork we need

   Washington State law requires one of these: the Title, an Affidavit in Lieu of Title, or a Junk Vehicle Affidavit. If a lender is still on the record, its release has to be in place first. We will tell you what that looks like for your car.

3. Pick a pickup time

   Once the paperwork is ready, same-day pickup is often possible. We are open 7 days a week, 8 AM to 11 PM, across Seattle, Tacoma and the cities around them.

4. We tow it and pay you

   Our driver checks the paperwork, loads the car and pays you cash on the spot. The towing is free.

After the pickup

• File your Report of Sale. RCW 46.12.650 gives you five business days, and DOL lists the fee as $18. Our post on what to do after you junk your car walks through it.
• Take your license plates off before the car leaves. DOL says sellers are legally obligated to remove them.
• Call your insurance company about the policy on that car.
• Keep copies of the lender’s release and your Report of Sale with your records.

Settling a family member’s car that still had a loan on it? Our post on selling an inherited car in Washington covers the extra paperwork for estates.