What is an auto lien release letter?

An auto lien release letter verifies that a vehicle does not have a lien holder or no longer has a lien holder. It is actually a clearance letter. When a financial institution lends money for the purchase of a vehicle, that institution becomes the first lien holder.

After the debt is paid in full, the lien holder issues the owner an auto lien release letter. The letter contains the vehicle's identification information like the VIN, the year, make and model, in addition to the lien holder's information. The letter is a legal document and should be filed at the appropriate driver's license office in which the lien was entered into.