We understand that wanting to donate a vehicle still under loan can be confusing and stressful. Many donors worry that their vehicle, which has an outstanding lien, cannot be donated. The good news is that you can donate your vehicle, but we need to ensure the title is free and clear of any liens before we can proceed with the pickup.
In most cases, this means either paying off the loan in full or working with your lender to have the lien released upon sale. Unfortunately, many charities and donation processors, including AutoLift, cannot accept vehicles with active liens as it complicates the transfer of ownership and the donation process.
How to make it happen
Contact Your Lender
Reach out to the lender holding the lien on your vehicle. Discuss your intention to donate the car and inquire about the options available to you, specifically regarding lien release procedures.
Pay Off the Loan
The most straightforward option is to pay off the loan completely. Request a payoff letter from your lender, which confirms the amount needed to clear the loan. Once paid, you can obtain a clean title, allowing you to proceed with your donation.
Confirm Lender's Release at Sale
If paying off the loan isn't feasible, ask your lender if they will agree to release the title upon the sale of the vehicle. This ensures the proceeds from the sale directly cover the outstanding loan balance.
Prepare Necessary Documentation
Gather all required documents, including the lien release (if applicable), title, and any other relevant paperwork. This will streamline the donation process and help avoid delays.
Schedule a Pickup
Once you have confirmed the lien release or paid off the loan, schedule a pickup with AutoLift. Ensure that all paperwork is in order, and our team will assist you through the final steps.
Common gotchas
Assuming All Lenders Release Titles
Tip: Not all lenders automatically allow title releases at the time of sale. Always confirm your lender's specific policies before proceeding with a donation.
Delays in Payoff Processing
Tip: If you choose to pay off the loan, keep in mind that processing times can vary. Make sure to plan for this and request any necessary documentation promptly.
Inaccurate Value Assessment
Tip: Before donation, ensure that you're aware of your vehicle's market value. If your car is worth more than the loan, consider how the deduction will work, as you can only deduct the amount above the loan balance.
If this path doesn't fit
If donating your vehicle with a loan proves too complicated, consider other options such as selling the car privately, paying off the loan first, or consulting with a financial advisor. You might also explore trade-in opportunities with a dealership, which could help alleviate the loan before considering a donation later.
New Mexico DMV specifics
In New Mexico, the DMV requires that all liens on a vehicle are released before transferring ownership. Visit your local DMV office to inquire about the lien-release process and necessary paperwork. Also, remember to surrender your license plates after the donation is finalized to avoid any future liability.