You lend significant money to someone to purchase a car while both parties shake hands before they drive away from the transaction. A handshake follows their departure, and you wonder if the person will repay you. That’s where a lien comes in. One of the essential steps to securing your investment when lending money for vehicle purchases involves learning the proper steps to place a lien on the financed car.

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But here’s the big question: can an individual put a lien on a car? You can place a lien on vehicle ownership, yet the process involves multiple steps beyond just naming the car with your title. A formal legal course, along with required paperwork, exists that needs specific compliance conditions for completion. The content presented in this blog serves as an essential resource for both private lenders and their relatives, as well as friendly loan participants.

Your money demands straightforward understanding because securing your investments should be treated as an absolute necessity.

What Is a Lien, and Why Does It Matter?

Under a standard lending agreement, the lender receives a legal claim known as a lien for property security that specifically enables control of the borrower’s automobile. Property ownership through secured loans functions as security while the borrower makes payments. Legal action against the borrower exists, combined with the option of automotive repossession for the lienholder.
Think of it as a safety net for your investment. If you’ve loaned money to someone for a car, placing a lien ensures you’re not left high and dry if payments stop.

Types of Liens on Cars

Understanding different types of liens can help you identify where your situation fits in:

  • Voluntary Lien: This is agreed upon by both parties, usually between a lender and borrower.
  • Involuntary Lien: Imposed without the car owner’s consent, like in cases of unpaid taxes or mechanic’s fees.
  • Bank or Financial Institution Lien: Most common when someone takes a car loan through a bank.
  • Private Lien: This is where you come in—as an individual lender.

So, again, can an individual put a lien on a car? Yes, but it usually falls under a private lien, and it must be handled with care to be legally binding.

When Should You Consider Putting a Lien on a Car?

Here are a few scenarios where putting a lien on a car makes sense:

  • You’re financing a car purchase for a friend or relative.
  • You’re loaning money and using the car as collateral.
  • You’re selling a vehicle with a payment plan.
  • You’re involved in a business deal where a car is part of the agreement.

In any of these cases, a lien protects you from financial loss if the borrower defaults or disappears.

How to Put a Lien on a Car as an Individual

Here’s your step-by-step guide to safely and legally placing a lien:

1. Draft a Loan Agreement
Start with a written loan agreement outlining the following:

  • The total loan amount
  • Payment schedule
  • Interest rate (if any)
  • Collateral (the car in this case)
  • Terms for default

Both parties should sign the document in front of a notary public to make it legally enforceable.

2. Get a Security Agreement
A security agreement functions as a legal document to showcase that borrowed funds use a vehicle as security. A security agreement needs to include the VIN, make, model, and year of the automobile. The security agreement functions as your primary basis for obtaining lienholder rights.

3. File a UCC-1 Financing Statement (If required)
Several states, alongside certain jurisdictions, require UCC-1 filings at the Secretary of State for lien announcement purposes. Presenting this form to the public reveals your lien status against the vehicle. The exact requirements for filing UCC-1 forms with the Secretary of State can be obtained by contacting your local DMV or relevant state office.

4. Record the Lien with the DMV
This is the big step. You need to go to the Department of Motor Vehicles (DMV) and officially register the lien. Bring:

  • The original loan agreement
  • The signed title
  • Your ID
  • Any required filing fee

The DMV will add your name to the car’s title as a lienholder.

5. Keep Proof of Lien
Once recorded, make sure you get a copy of the title showing your name as the lienholder. Keep this safe—it’s your proof that the lien is in place, and you have legal rights to the vehicle if the borrower defaults.

What Rights Do You Have as a Lienholder?

The power of a lienholder consists of various key elements.

  • Right to repossess the vehicle if the borrower fails to pay.
  • Right to be paid from the sale of the vehicle if it’s sold or repossessed.
  • Right to prevent the sale or transfer of the car until the loan is paid off.

This is why the answer to “Can an individual put a lien on a car?” is so important—because doing so gives you serious legal protection.

Things to Keep in Mind

While the process is straightforward, don’t skip the legal steps. A verbal agreement or a handshake won’t protect you in court. Here are a few pro tips:

  • Always notarize your agreements.
  • Don’t skip DMV paperwork—it’s the most critical step
  • If in doubt, consult an attorney familiar with property and lien laws in your state.

Removing a Lien Once the Loan Is Paid

Once the borrower repays the loan in full, it’s your responsibility to release the lien. You’ll need to:

  • Provide a Lien Release Letter to the borrower.
  • File the release with the DMV to remove your name from the title.
  • Update your records to show the loan is satisfied.

This not only finalizes the transaction but also maintains your credibility and trustworthiness in any future lending scenarios.

If you’ve ever wondered, “Can an individual put a lien on a car?”—After delving into this matter-of-fact information, you possess all the relevant details. The use of lien security remains essential in situations where you assist family members and when you work with private lending. Having a lien serves as your legal security system. A lien does not prevent unfavorable events but provides essential security in case problems arise.

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Protecting your saved money has become an absolute necessity because it is a smart financial practice. You can establish legal protection for your investment through lien placement, which stands firm against excuses and unfortunate circumstances.

Need help drafting a loan agreement or filing a lien correctly? Don’t risk losing your money. Get guidance from a legal professional or your local DMV office to make sure every step is done right.

Take action today because peace of mind is worth it.