Paying off that GMAC car loan can be an exhilarating experience, but to complete the process, a clear title is often issued as proof of ownership. A clear title allows you to freely sell or transfer the ownership of the car to another person when you want to trade it in later for a new vehicle or sell it. A title that still lists GMAC as a lien holder usually prevents any type of ownership transfer if you can't prove that the lien was paid off.
Ally Financial, Inc., the new name for GMAC Finance, normally does a couple of things once a vehicle has been paid in full. It sends notification to the Department of Motor Vehicles in the state holding the title to let them know they no longer have a financial interest in the car. Ally is usually also required to send you a letter on the company’s letterhead stating that you have paid off the loan and the vehicle is now yours.
An electronic title program allows Ally Financial to place and release liens on vehicles without having to go through the expense and efforts of using paper forms. New York State allows Ally Financial to follow these procedures and no longer issues a new title unless one is requested by the car owner and pays the fee to issue a new title. The lien release letter proves ownership along with the original title, to avoid having to purchase a new title.
Some states still use a paper process to issue clear car titles. For example, Louisiana requires a Vehicle Application Form in which the vehicle owner attests that the vehicle has been paid in full. The form must be submitted to the DMV office along with a copy of the letter from Ally Financial proving the loan has been paid, a copy of the car registration and applicable fees that vary from district to district. The DMV in Louisiana will verify the documentation and send you a clear title.
Procedures for releasing GMAC liens depend on the state where the title to the vehicle is currently being held. All states want proof that the lien has been satisfied. Your local DMV office will be able to inform you of the specific requirements for processing lien release information in your area.
Griffith Pritchard served as a senior branch manager and banking officer for M&T Bank. He specialized in small business and personal financial, credit and banking products. He also has extensive experience in small business sales and non-profit management. Pritchard is a graduate of Hobart College.
