How to get the title after paying off a car loan
After you pay off your car loan, how you get the title typically depends on if your state is considered a "non-holding state" or a "holding state." Either way, you'll need to work with your BMV or DMV to get a new title that reflects you as the sole owner.
Non-holding states
Non-holding states allow borrowers to be listed as the primary owner of the car, with the lender (lienholder) listed separately, so you may already have received the title when you purchased the car. Once you pay off your loan, your lienholder will send you an official release of lien letter. You'll take that to your state BMV or DMV (or, in some cases, to your local city/town clerk's office) along with your current title and apply for an updated title. Note that the BMV or DMV may already have your title if you don't have it. It can take anywhere from two to four weeks to receive your new title.
Title holding states
In holding states, the lienholder is listed as the primary owner on the title, and they keep the title until your car is paid off. Your name is mentioned separately on the title. When you pay off the loan, the lienholder will provide a notification of the ownership change through one of these methods.
Electronic Lien and Title (ELT) system: If you live in a state that uses the ELT, your lienholder may choose to notify your state of the change in ownership electronically. The lienholder may wait up to two weeks after receiving your final payment to do this. Once they receive the ELT notification from the lender, the BMV or DMV may automatically send you a copy of your new title. Note that some states may only give you a paper copy if you specifically request it.
Manual (non-ELT) notification: In states where the change in ownership isn't electronically reported, the lienholder may send a paper notice to the BMV or DMV about the change, or they may send you the current title along with a release of lien letter. If they send a notice directly to your BMV or DMV, find out from yours whether they'll send you the new title or if you must file paperwork to get it yourself. If the lienholder sends you the title and a release of lien letter, you'll have to take those to your BMV or DMV and fill out paperwork to get a new title reflecting the change in ownership.
How long does it take to get your car title from the bank?
Generally, it takes two to six weeks, but it will depend on your state's processes. For the specifics of how long it takes to get your car title from the bank or lender once you pay off your car loan, check with your BMV or DMV. While your lender or bank plays a role in the process, you'll ultimately need to get your new title through the BMV or DMV.
Loan payoff and car insurance
Once you've paid off your car loan and found out how to get your new title, you should let your auto insurance company know about the change in ownership. Lienholders are listed on auto insurance policies, and they can be removed once the loan is paid off. Generally speaking, you don't have to wait to receive the new title before notifying your insurer.
This change alone likely won't affect the price of your insurance. However, you might decide to drop comprehensive and collision coverages that your lienholder required you to carry. Dropping car collision coverage and comprehensive auto coverage or decreasing your limits may lower your car insurance premium.
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