Private sale with a lien?

[Elkins45]

How does one safely buy a used car in a private sale when it still has a lien? I assume the debt follows the vehicle and not the guy who incurred it, so how do you make sure it’s paid off before you give them the money? I can see this being a sticking point because the seller probably doesn’t have the funds to pay it off until he gets your money? Is their a standard way of handling a sale like this?

I’m sorry if this is a noob question but it’s not a situation I’ve ever been in.

 

[AZjeff]

I've read of people going to the lender with the buyer and seeing it get paid off. They've dealt with it before. Then there's the title and registration. Hope it's priced well for the hassle. Be careful.

 

[JTK]

You wouldn't want to take possession of, or hand all your money over towards the vehicle, until you have the lien release note(s) in your hand.

 

[97prizm]

In Colorado you want to find the owner ie the financial institution that owns the car. Until the loan is paid off the bank owns the vehicle. I'd also dig to see if they are upside down on the loan as car prices are falling and they may have paid significantly more.

 

[ekrampitzjr]

Walk away from this one, unless the seller can get clear title by paying the lein. It's almost as bad as buying a vehicle with no title or a salvage title. They aren't worth the headaches.

Car dealers can handle a trade-in with a lein by paying it off and rolling over the debt into the amount borrowed for the replacement vehicle. You as an individual don't have that ability.

 

[Lubener]

How does one safely buy a used car in a private sale when it still has a lien? I assume the debt follows the vehicle and not the guy who incurred it, so how do you make sure it’s paid off before you give them the money? I can see this being a sticking point because the seller probably doesn’t have the funds to pay it off until he gets your money? Is their a standard way of handling a sale like this?

I’m sorry if this is a noob question but it’s not a situation I’ve ever been in.

I would believe the seller will not have the title till the debt is paid. No clear tiltle no sale for me, it's not worth the hassle..

 

[Blueshound]

Normally you (or your bank) write two checks. One to the lienholder for the outstanding principal and interest, and the other to the owner for any equity. Or if the loan is is underwater, the seller writes a second check to the lender.

 

[eljefino]

You'd have to meet at the bank that holds the title. Some states use "E-titles" that can be satisfied instantly-- don't know how that works.

Some states issue "Memorandum titles for registration only", don't accept one of these.

Some states maintain a separate title and lien release paperwork, so if the title shows a lien, get the other paper too.

Kentucky appears on a short list (slide 5) that looks like the registrant can get a title before paying the note off, so be doubly careful with advice from a worldwide website.

Tread carefully, any private seller who doesn't 100% have this arranged already is a space cadet who may mean well but can take off with your money.

 

[64bawagon]

My credit union is pretty helpful with stuff like this. I have both bought and sold items with title liens. Its all about making sure the financial institutions approve of the transfer method. As long as they are willing to sign off on the title its not that big of a deal.

 

[atikovi]

Had this situation with a WRX I bought a few years ago. I met the seller at the leinholder's bank. We both gave checks to the bank to pay off the loan and I took possession of the car. It took the bank over a month to send out the title. And the title goes to the guy I bought it from, so if he wanted to be a hard case and not sign it over to me, it could have become a problem. Luckily it went smoothly.

 

[BLND1]

Had this situation with a WRX I bought a few years ago. I met the seller at the leinholder's bank. We both gave checks to the bank to pay off the loan and I took possession of the car. It took the bank over a month to send out the title. And the title goes to the guy I bought it from, so if he wanted to be a hard case and not sign it over to me, it could have become a problem. Luckily it went smoothly.

Get a bill of sale at the same time. Not perfect, but helps.

 

[Elkins45]

I’m not actually considering doing this, it just occurred to me that I didn’t know how it would be done after seeing this listing on Craigslist: https://louisville.craigslist.org/cto/d/louisville-2017-toyota-yaris-white/7594204408.html

 

[SaberOne]

Nope, not for me. I wouldn’t sleep at all until I had that title in my hand, so I probably would be too paranoid about the seller giving me the title after the fact.

 

[eljefino]

Had this situation with a WRX I bought a few years ago. I met the seller at the leinholder's bank. We both gave checks to the bank to pay off the loan and I took possession of the car. It took the bank over a month to send out the title. And the title goes to the guy I bought it from, so if he wanted to be a hard case and not sign it over to me, it could have become a problem. Luckily it went smoothly.

Bizzare, and not something I'd be comfortable with.

I'd be ok with a bank or licensed dealer sending me the title on their timeline, or processing it so the DMV will do the same, but the idea that a released lien would go to the private seller is unsettling.

 

[atikovi]

I’m not actually considering doing this, it just occurred to me that I didn’t know how it would be done after seeing this listing on Craigslist: https://louisville.craigslist.org/cto/d/louisville-2017-toyota-yaris-white/7594204408.html

Three lousy photos and a single sentence ad from a clueless seller for a high mileage overpriced car. No wonder it's been listed 26 days. Offer $4500 cash.

 

[Elkins45]

Three lousy photos and a single sentence ad from a clueless seller for a high mileage overpriced car. No wonder it's been listed 26 days. Offer $4500 cash.

I wasn’t planning on offering them anything, but I was somewhat surprised at your assessment of 85k on a Toyota as being high mileage. That’s actually very low mileage for most the used cars I’ve been seeing in the $8k price range. Most $8k Toyotas I see listed now have closer to 150k or more miles.

 

[eljefino]

Three lousy photos and a single sentence ad from a clueless seller for a high mileage overpriced car. No wonder it's been listed 26 days. Offer $4500 cash.

85k is high mileage?

 

[tnt_motorsports]

First things first is you need to be able to trust the seller. I bought a large travel trailer several years ago that the owner had a loan on. I had several conversations with him regarding this, and I also was full transparent with my bank. Both banks connected on the situation and understood what was going to happen. It worked out in the end but my advise is you need to be careful.

Just my $0.02

 

[JavierH19]

make sure the lien is released first so get in contact with their lender. If they don't want to then walk.

 

[John105]

I would believe the seller will not have the title till the debt is paid. No clear tiltle no sale for me, it's not worth the hassle..

Agreed. But I recall in NYS that I had a title to a car I had a loan on. But your point is 100%--why would I, want to deal with a private party who can't pay off the loan? For supply or demand, the two concepts that come to mind are, willing and able. We're assuming they're not able to. What if they're not willing to (after collecting funds)?