Lower your car payment in Minnesota

What’s different about refinancing a car loan in Minnesota

Vehicle titles in Minnesota are issued by the Minnesota Department of Public Safety, Driver and Vehicle Services (DVS), which records and releases liens on paper titles. That is worth knowing because a paper lien release adds mailing time between your old lender and your new one.

• Minnesota keeps the paper certificate of title with the vehicle owner even while a car loan is outstanding. Driver and Vehicle Services states that when a secured party is documented on a Minnesota title, the title is mailed to the owner of the vehicle and a lien card is mailed to the lien holder, and that transfer of ownership cannot be completed without the lien holder's authorization.

  Source: Minnesota Department of Public Safety, Driver and Vehicle Services — Vehicle title: adding or removing a security intere

• When a Minnesota auto loan is satisfied, the secured party must execute a release of security interest in the format the department prescribes within fifteen days, or within seven days where the satisfaction involves a dealer licensed under section 168.27. If the lender holds the certificate of title, it must mail or deliver the certificate and release to the next secured party named on it, or to the owner if there is none.

  Source: Minnesota Statutes section 168A.20, Satisfaction of Security Interest (Office of the Revisor of Statutes)

• A refinancing lender's lien on a Minnesota vehicle is not valid against the owner's other creditors or later buyers and secured parties unless it is perfected. Perfection occurs by delivering to the department the existing certificate of title, if any, together with an application for a certificate of title containing the name and address of the secured party and the date of the security agreement, and the security interest is perfected as of the time of that delivery.

  Source: Minnesota Statutes section 168A.17, Perfection of Security Interest (Office of the Revisor of Statutes)

• Minnesota law protects a borrower's ability to pay off an existing car loan early in order to refinance it. Under the prepayment subdivision, the borrower or purchaser may prepay in full the unpaid balance of a consumer loan or credit sale contract at any time without penalty. The section applies to credit extended by state and federally chartered banks and savings institutions, industrial loan and thrift companies, and regulated lenders organized under chapter 56.

  Source: Minnesota Statutes section 47.59, subdivision 9, Right to Prepay (Office of the Revisor of Statutes)

• After a default, a Minnesota lender may take possession of the financed vehicle either through judicial process or without any court order at all, provided that a non-judicial repossession proceeds without breach of the peace. The same section also allows the lender, if the parties so agreed and in any event after default, to require the borrower to assemble the collateral and make it available at a place reasonably convenient to both parties.

  Source: Minnesota Statutes section 336.9-609, Secured Party's Right to Take Possession After Default (Office of the Revisor of S

• The Minnesota Attorney General's Car Handbook cautions that finance companies normally are not obligated to send letters warning that a car may be repossessed, and that a lender may have a right to repossess once a payment is even one day late following the grace period. It also explains that a borrower can be pursued for the shortfall when the vehicle sells for less than the loan balance, and that a creditor may tow a car from in front of a house but may not break into a garage to reach it.

  Source: Office of the Minnesota Attorney General — The Car Handbook

• A Minnesota borrower can stop a post-repossession sale by redeeming the vehicle. The debtor, any secondary obligor, or another secured party or lienholder may redeem the collateral by tendering fulfillment of all obligations secured by it plus the lender's reasonable expenses and attorneys fees. That right ends once the lender has collected the collateral, disposed of it or entered a contract for its disposition, or accepted it in full or partial satisfaction of the debt.

  Source: Minnesota Statutes section 336.9-623, Right to Redeem Collateral (Office of the Revisor of Statutes)

These are general procedural facts about Minnesota, not advice about your loan. Rules change, and your lender’s own process may add steps — a licensed specialist can tell you what applies to your situation.