Home Car insurance Car insurance policies What to do once you pay off your car loan What to do once you pay off your car loan View Carriers Please enter valid zip Compare top carriers in your area Written by Ashlee Tilford Ashlee Tilford Ashlee, a former managing editor, insurance, at QuinStreet, is a journalist and business professional. She earned an MBA in 2014 with a concentration in finance. She has more than 15 years of hands-on experience in the finance industry. | Reviewed by Laura Longero Laura Longero Laura is an insurance expert with more than 15 years of experience educating people about personal finance topics and helping consumers navigate the complexities of auto insurance. She writes and edits for QuinStreet’s CarInsurance.com, Insurance.com and Insure.com. Prior to joining QuinStreet, she worked as a reporter and editor at the USA Today Network. | Updated on: August 1, 2024 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. Paying off your car loan offers a range of financial benefits, such as freeing up a significant portion of your budget, reducing your overall debt and improving your credit score. However, your responsibilities don’t end with the final payment. One of the first actions you should take is to remove the lien from your vehicle title. This step is crucial to officially recognize you as the sole owner of the car, ensuring there are no legal or administrative hurdles down the road if you decide to sell or trade in your vehicle. With the lien removed, it’s also a perfect time to reassess your car insurance coverage. When you had an auto loan, your lender likely required you to carry comprehensive and collision coverage. Now, with full ownership of your car, you have the flexibility to adjust your insurance policy to better suit your needs. Additionally, take this opportunity to shop around and compare quotes from different insurance providers to ensure you’re getting the best possible rate. Here is everything you need to do after paying off your car loan. Get the car’s title After making the final payment on your car loan, obtaining your car’s title is an essential next step. The title is a legal document that proves you are the sole owner of the vehicle. Initially, the lender holds the title until the loan is fully repaid. Once the last payment clears, the lender will send you a lien release document, which states that the lender no longer has a financial interest in the car. This document is crucial for the next steps in the process. With the lien release in hand, your next move is to visit your local Department of Motor Vehicles (DMV) or the appropriate state agency to update the title. You will need to submit the lien release document along with any required forms and potentially pay a small fee. The DMV will then issue a new title that reflects you as the sole owner of the vehicle, free from any liens. This updated title is important not just for your records but also if you ever decide to sell or trade in your car, as it confirms your legal ownership. Don’t forget to remove the lienholder Your insurance company will need to know that there is no longer a lien on your car title. They may request to see proof of the lien-free title but then will remove the financing company as the lienholder on your policy. This is an important step because if you are in an accident and there is an insurance payout, you will want that payout to come to you, not the financing company. Reassess your car insurance coverage Next, you’ll want to reassess your car insurance coverage. When you had an auto loan, your lender likely required you to maintain comprehensive and collision coverage to protect their financial interest in the vehicle. Now that you own the car outright, you have the flexibility to tailor your insurance policy to better suit your needs and financial situation. Start by evaluating your current coverage levels and considering whether you still need the same extent of protection. If your car is older or has depreciated significantly, you might decide that dropping comprehensive and collision coverage can save you money on premiums. No matter what, you’ll still need some level of coverage because car insurance is a legal requirement in nearly every U.S. state. Shop for better car insurance rates Now that you’ve paid off your loan, you can shop around for the amount of coverage you need and potentially save on insurance. Start by gathering quotes from multiple insurance providers to compare prices and coverage details. Doing so can help you find the best deals available. As you compare insurance rates, consider more than just the price. Look at the coverage options, customer service ratings, and the financial stability of each provider. Ask about potential discounts you may qualify for, such as safe driver discounts, multi-policy discounts or bundling discounts if you have other insurance policies with the same company. Additionally, review the terms and conditions of each policy to ensure it meets your needs without compromising essential coverage. By taking the time to shop around and carefully evaluate your options, you can find an insurance policy that offers the best value, ensuring you’re well-protected at a reasonable cost. QuickTake What happens to home and auto insurance after a policyholder dies? How to read your auto insurance policy What happens if you miss a car insurance payment? How to cancel your car insurance policy What is a named driver exclusion and how does it affect your car insurance? How to switch auto insurance Rental reimbursement car insurance coverage "Price optimization" puts the screws to loyal car insurance customers The difference between cancellation and nonrenewal of car insurance 12 ways to save money on car insurance Moving and insurance: Checklist for a smooth move Unforgiven: Top 5 reasons your insurance policy will be cancelled Arm in a cast? On pain meds? Maybe you shouldn't drive See more > Should you keep full coverage car insurance after paying off your car loan? Deciding whether to keep full coverage car insurance after paying off your car loan depends on various factors, including the age and value of your vehicle, your financial situation and your risk tolerance. Full coverage, which typically includes liability, comprehensive and collision insurance, provides extensive protection against a wide range of potential damages. If your car is relatively new or has a high market value, maintaining full coverage is a wise choice. It ensures that you are financially protected against costly repairs or replacements in the event of an accident, theft, or other damage. However, if your car is older and has significantly depreciated in value, the cost of full coverage insurance might outweigh the potential benefits. If you have an older car, you might consider dropping comprehensive and collision coverage to save on premiums. Instead, you can opt for liability coverage, which is usually required by law and covers damages to other people’s property and injuries to others in an accident — up to the limits of your policy. Before making a decision, calculate the potential savings from reducing coverage and weigh it against the risk of having to pay out-of-pocket for repairs or a new vehicle if an incident occurs. Consulting with an insurance professional can also help you make an informed decision that aligns with your specific needs and financial goals. Taking these steps after paying off your car insurance policy can help you maintain optimal coverage while potentially reducing costs. By staying proactive and informed, you can ensure that your insurance continues to meet your needs and provides peace of mind on the road. Ashlee TilfordContributor  . .Ashlee, a former managing editor, insurance, at QuinStreet, is a journalist and business professional. She earned an MBA in 2014 with a concentration in finance. She has more than 15 years of hands-on experience in the finance industry. In case you missed it Best Car Insurance Companies of 2024 Car insurance rates by state in 2025 What is full coverage car insurance? How much does car insurance cost for seniors in 2025? A complete guide to adding a teenager to your car insurance policy in 2025 What to do after a car accident that’s not your fault Total warfare: What to do when your auto insurer totals your car Car insurance claims: Who gets the claims check? 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