What to Do When You Want to Scrap a Car with a Lien
Scrapping a car is the best way to get rid of your old or damaged car, but what happens if there’s a lien on it? Many car owners face this situation, wondering if they can still junk their car when a financial institution or lender has a legal claim on it. If you are in this confusion, don’t worry. This blog will help you to understand things properly so you can be clear about your car scrapping.
What is a Lien on a Car?
Before we understand whether you can scrap a car with a lien or not, let’s discuss what is a lien. A lien is a legal claim against your vehicle, which is placed by a lender or financial institution when you take out a car loan. It means that the lender has all the rights to the vehicle until the debt is fully paid off. In some situations, liens can also be placed due to unpaid repairs, mechanic’s fees, or even unpaid taxes.
If your car has a lien, it means the vehicle is not fully yours yet. This can make the process of scrapping the car more complicated, but not necessarily impossible.
Can You Scrap a Car with a Lien?
The clear answer is no, you typically cannot scrap a car with a lien without the lender’s permission. If the lender takes any financial interest in the car, they have to be involved in the decision to sell or scrap the car. Scrapping a car with a lien without permission will be counted as illegal and will create some serious issues. However, there are some ways to legally scrap a car with a lien, and here in this blog we will learn how it works.
Also Read: Can A Car Be Scrapped Without Owners Permission?
How to Legally Scrap a Car with a Lien
If you are thinking of scrapping your vehicle but it still has a lien on it, here are some easy and legal ways to do it.
1. Pay Off the Lien
The easiest way to scrap a car with a lien is to pay off the remaining balance. Once you complete the loan, the lender will release the lien, and you will get a clear title. It means you officially own the car and can scrap it without any legal problems.
2. Contact the Lender
If paying off the balance is not an option right now, contact the lender. You need to explain the situation and see if they are ready to scrap the vehicle or not. Some lenders may agree to it if the car is completely totaled or not able to move or run. In some situations, they will ask for the car scrapping process to be initiated for the remaining loan balance.
3. Sell the Car to Pay Off the Lien
There is one more option. Sell the car to a buyer who is willing to pay off the lien. You can choose a private buyer or a dealership that will purchase the car and handle the lien payment directly with the lender. Once the lien is okay with the deal, you can then choose to scrap the car if required.
4. Transfer the Lien to Another Vehicle
Some lenders allow lien transfers to another vehicle. It means you might be able to transfer your remaining balance to a new car loan while discarding your old vehicle. You will need to confirm with your lender to see if there is a possibility.
5. Negotiate a Settlement with the Lender
If you are facing difficulties in making payments and the car is not in good condition, you might be able to negotiate a settlement with the lender. There will be some lenders who are willing to work out a deal where you pay a reduced amount to satisfy the debt; it will be easy to get the lien released and scrap the car legally.
Also Read: Scrap Car Recycling Policy Canada – The Ultimate Guide 2025
What Happens If You Scrap a Car with a Lien Illegally?
If you scrap a car with a lien without the lender’s permission, you will face some serious consequences, like
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- Legal Trouble: Selling or scrapping a car without clearing the lien is considered fraud and can lead to legal action against you.
- Financial Liability: Even if you do not have the car, you’re still responsible for the remaining balance on the loan. The lender can still ask for money from you.
- Damage to Your Credit Score: Missing or failing a car loan to resolve the lien can negatively impact your credit score and will make your future loans difficult.
You should clear the lien completely before starting the car scrapping to avoid any kind of issues.
What if the Car is Totaled?
If your car has been totaled due to an accident but still has a lien, the process is a little different than usual. Mostly, insurance companies manage the payout and send the money directly to the lender first. You will get the remaining balance if the payout amount is more than what you have. If it is not enough for you, then you may still get money on the loan. In some situations, lenders will allow the car scrapping once the insurance process is complete.
Also Read: A Complete Checklist of Documents You Need to Scrap Your Car in Canada
How to Check if Your Car Has a Lien
If you do not know your car has a lien, here are some easy ways we have mentioned that you can use to check.
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- Check Your Vehicle Title: If your title has a “lien holder” or lists a lender’s name, your car has a lien.
- Contact Your Lender: If you have a car loan but aren’t sure if there’s a remaining balance, call your lender and ask.
- Use a Vehicle History Report: Websites like Carfax or your local DMV can provide a vehicle history report that shows whether your car has an active lien.
Final Thoughts
Scrapping a car with a lien is a little difficult, but you can do it with the right understanding. All you need to do is handle the lien properly. There are a few things you can do this for, either by paying it off, negotiating with the lender, or exploring legal alternatives. Do not get into the trap of junking the car illegally, as it can create many financial issues. Contact Greenway Auto Recycling for trustworthy scrap car removal services.
