How to Understand and Handle a Mechanic's Lien on a Car
Learn what happens if you cannot pay your auto repair bill—or you don't agree with the bill and refuse to pay it—and a mechanic's lien is placed on your car.
You've gotten your vehicle repaired, but you may not be able to pay the hefty bill. You may not even agree with all the charges listed. This can be a reality for many drivers. Thankfully, there are a few strategies you can use to navigate the situation.
Before you decide how to handle things, it's important to know what a mechanic's lien on a car is, and what could happen as a result of one.
What Is a Mechanic's Lien on a Car?
When you finance a vehicle, your lender has a lien or ownership claim on your car's title and becomes the lienholder. However, a car lender is not the only one who can claim ownership rights to your vehicle.
A mechanic's lien on a car allows companies and people who serviced your vehicle—whether that's repairing, towing, storing, or providing parts—to place a lien on your title in the event that they aren't paid.
Certain lien requirements vary by state, such as:
- The amount of time they must wait to put the lien on your vehicle
- The steps they must take to establish the lien
- Whether or not they can sell your car to pay off your bill
- How you must be notified of the lien
Who Can File a Mechanic's Lien?
Any person or company who completes a service on your vehicle without getting paid for their services can file for a mechanic's lien on your car. That's because this is a statutory lien, meaning the law already exists to allow someone to place this lien in certain circumstances.
If you're still making payments on the car, the mechanic may be placed as another lienholder on the vehicle's title (usually with priority over the lender). A lien can be placed on your car whether the vehicle is still in servicer's possession or not (such as if a check defaults after you already took the vehicle home).
How to Handle a Mechanic's Lien
One of the best defenses for protecting yourself from a mechanic's lien is to communicate with your repair person as the work is being done and pay your bill on time. However, if you don't have the funds to do so or you do not agree with the charges on your bill, you may find yourself stuck dealing with the lien.
Mechanic's liens give the lienholder power to:
- Keep the vehicle
- Sell the vehicle after a certain time has passed
Remember that how this is enforced depends on the where you live, which means the first thing you might consider doing is learning how mechanic's liens work in your state. Contacting a local attorney with experience in lien laws can be very helpful—both in understanding how the lien laws work in your state and in advising you of your options.
Before paying your bill, ask to inspect the repairs. Take photos and document the work in the event that you aren't satisfied and wish to pursue legal action over the issue. Finally, you'll need to pay the bill. If you can't pay the bill before the car can legally be sold by auction or private sale, then you might consider an auto repair loan.
While a lien is not placed on your credit report at the three big credit bureaus, the person that files the lien can report nonpayments on a loan to the credit bureaus. A listing of nonpayment can impact your credit score.
How to Avoid a Mechanic's Lien in the Future
All vehicles need services from time to time, such as repairs, towing, and even storage. It might make sense to plan for these expenses ahead of time by setting up a specific savings account for your vehicle, and putting aside money each month for maintenance and repair needs. Doing so can help you avoid a mechanic's lien in the future.
How much should you set aside? According to the Bureau of Transportation Statistics, a vehicle costs an estimated $0.09 per mile driven to maintain (maintenance, repair, and tires). That means someone driving 15,000 miles each year should expect to pay an estimated $1,350 in maintenance costs. Divide this number by 12 months, and you can set up an automatic savings plan to put $112.50 per month into your car savings account.
It may not always be possible to avoid a mechanic's lien on a car entirely. If you find yourself dealing with a mechanic's lien, ensure you know the laws, follow the deadlines, and make things right with the lienholder. You may also be able to sort out your legal options with an attorney if needed.