How Can We Close Our Car Loan? A Step-by-Step Guide to Payoff and Ownership Transfer

By Md Emran Khan | Updated July 13, 2025

So your car loan is almost done — or maybe you just want to pay it off early. Either way, closing your car loan the right way is essential to avoid future surprises like missed paperwork, lingering interest, or issues with the vehicle title.

Here’s how to officially close your car loan and become the legal, debt-free owner of your vehicle.

---

 What Does “Closing a Car Loan” Mean?

Closing a car loan means you’ve:

• Paid the loan in full
• Received confirmation from the lender
• Cleared the lien (the lender’s claim on the car)
• Obtained the title in your name

---

 Step-by-Step Guide to Closing Your Car Loan

Step 1: Request a Loan Payoff Amount

Call or log in to your lender’s website and request a payoff quote. This will include:

• Outstanding principal
• Any interest due up to the payoff date
• Possible fees (like prepayment charges)

 This quote is usually valid for 7–10 days.

---

Step 2: Make the Final Payment

Pay the exact payoff amount, not just your regular EMI.
Use:

• Bank transfer
• Certified check
• Online payment portal

Get a receipt or confirmation after payment!

---

Step 3: Request a Loan Closure Certificate

Ask your lender for:

• Loan Closure Letter (proof you paid in full)
• No Dues Certificate
• Account closure email or document

This is important for credit report updates and personal records.

---

Step 4: Receive the Title and Lien Release

Once the loan is closed, the lender will send you:

• The vehicle title with the lien removed
• Or a lien release letter to submit at your DMV

This proves you now fully own the vehicle.

---

Step 5: Update Your Vehicle Title (If Needed)

Visit your local DMV (or BRTA office if in Bangladesh) with:

• Title/Lien release
• ID and insurance
• Proof of payment or closure letter

Update the title and remove the lender’s name. You’re now the legal owner.

---

Step 6: Check Your Credit Report

About 30–60 days after closure:

• Check Equifax, Experian, or TransUnion
• Make sure the account is marked “Closed – Paid in Full”

If not, dispute it with supporting documents.

---

 Bonus Tips

• Keep all documents for at least 7 years
• Inform your insurer if ownership status has changed
• Remove any auto-pay settings linked to the loan

---

 FAQ: Car Loan Closure

Q: Can I pay off my loan early?
A: Yes, but check if there’s a prepayment penalty in your loan terms.

Q: Do I still need to pay insurance after closing the loan?
A: Yes — car insurance is required regardless of loan status.

Q: How long does it take to get the title after closure?
A: Usually 7–30 business days, depending on your lender and location.

 

---

 Source Comparison Table: Car Loan Closure Process

Source	Type	Summary	Link
NerdWallet – Car Loan Payoff Guide	Finance Blog	Explains how to pay off a car loan and what to expect	Visit
Experian – Paying Off Your Car Loan	Credit Bureau	What happens to your credit and title after closure	Read
Bankrate – Car Loan Tips	Loan Comparison Site	Tips on closing, refinancing, and title transfer	Explore
Consumer Financial Protection Bureau (CFPB)	Gov’t Resource	Legal rights and protections during loan payoff	View
Edmunds – Auto Loan Management	Car Buying Guide	Walks through closing and lien release process	Learn

 

Read More Articles