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Who must provide a release letter if a lien is paid out on a traded-in vehicle?

  1. The previous owner

  2. The dealership

  3. The financial institution

  4. The new owner

The correct answer is: The financial institution

The financial institution must provide a release letter if a lien is paid out on a traded-in vehicle because they hold the title for the vehicle until it is fully paid off. The previous owner, dealership, and new owner do not have the authority to provide a release letter as they do not hold the lien on the vehicle. The previous owner has already released their ownership of the vehicle through the trade-in process and the dealership only handles the transaction and sale of the vehicle. The new owner only receives the vehicle and does not have any lien on it. Therefore, the correct answer is C - the financial institution.