To get a letter of permission to take your vehicle to Mexico, most lenders will simply ask you to fax a copy of the Mexican insurance policy you purchased, showing coverage for the entire period that the vehicle will be in Mexico. Therefore, if you owe more on your vehicle than it is currently worth, you may have to purchase a more expensive policy to satisfy the lenders requirements. Lienholders will usually not accept a policy with a coverage limit that is less than what is owed on the vehicle. And they likely will want fixed deductibles included with the coverage. They also require both physical damage and theft coverage. Lenders often set their own minimum acceptable limit of Mexican liability coverage. They will require you to provide proof that you have purchased a Mexico insurance policy with the proper coverage before they will provide you with a letter of permission. The lienholder wants their investment properly insured so they don't lose money, especially while it is away from its home country. Vehicle Insurance Prior to Written Permission Because of the lienholder's ownership in the vehicle, the lender has a say in whether you can legally take the financed vehicle outside of the country and the conditions around it. If there is a lienholder listed on the title for your vehicle, the lender still maintains at least partial ownership of the vehicle, even if you only have one payment left. Why You Need a Letter of Permission from the Lienholder The policyholder would only receive the remaining amount, after the balance of the loan is fully paid. This is because the lienholder would be the first to receive an insurance claims payout after a loss, instead of the policyholder, also called the named insured. When talking about insurance, the lienholder is often referred to as the loss payee on the insurance policy. Once the loan on the vehicle is paid, the lien is removed, and then the title is transferred. Meaning the lienholder is still the owner of the vehicle until the loan is paid off. Whenever there is a lien on a vehicle, the lienholder maintains a legal financial interest in that vehicle until the loan is completely paid off. If you have ever taken out a loan to buy a car, truck, van, SUV, motorcycle, motorhome, travel trailer, or other type of vehicle, then a lien was placed against that vehicle. It is common to borrow money from a lending institution or individual when purchasing a motor vehicle. If you do not own the vehicle that you are planning to drive to in Mexico, it makes sense to make the necessary arrangements to get the letter before you depart. It is better to know if you will need a letter of permission before beginning your trip. You are borrowing someone else's vehicle, and they are not traveling with you.
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