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Buying a Car from a Private Seller with a lien - UPDATE post 19

post #1 of 28
Thread Starter 
There is a used car that we are planning on buying, once it gets checked out by our trusted mechanic on Saturday. We'll be able to write a check at the Auto Tags place. However, the seller still has a lien on the car, so he doesn't actually have possession of the title.

What's the standard process for this? I'm not excited about handing over a check without receiving the title, but I know that he needs the check to pay off the loan so he can get the title. I'm sure this is a common transaction, and I'm sure that there's standard protocol for this situation. I just want to make sure we do this safely!

I'll call the AutoTags place on Monday to see what they say, but I was wondering if anyone here had any experience, good or bad, with this type of transaction.

Thanks,
Aven
post #2 of 28
I would never hand off a check without receiving the title. I would call the lein holder and see what they say.
post #3 of 28
I'm not sure but I'd feel more comfortable writing the check to the lien holder and not the person. What were you planning to accomplish by purchasing the car from the seller at the tags place? I'm not sure what the tags place can do without the actual title being there???

How about giving your bank a call and ask them how they would handle it from their end if they were the lien holder.

Let us know what you find out.
post #4 of 28
In my experience most lien holders have offices in the city (or an office authorized to do business for them). You should be able to call them about the process but I think you normally take certified funds down to the office to complete the transaction.
post #5 of 28
I would absolutely not do this unless you conduct the transaction *in the office of the lien holder*. They can either give you the title right there or send it to the DMV. The seller should not be in possession of the title at all.
post #6 of 28
In NY we have the titles even if there is a lien on it. But I know some states the bank will keep the titles. I would go with the seller to the lien office and complete the transaction there with the car waiting outside for you.
post #7 of 28
Thread Starter 
All good advice so far, but I'm frustrated to say that the lien holder's offices are 2 hrs away. I'll easily drive that far to not get scammed out of so much money, of course, but I wish it were closer!

I've only ever bought/sold cars at the auto tags place, but that's always been with a free and clear title.

We're in Pennsylvania, if that matters.

Aven
post #8 of 28
the bank or credit union that owns the car will not allow title transfer without the lein being paid in whole. Find our who holds the lein and call them. They will tell you what you and the seller need to do to square everything away. Then, tell the seller to call their lein holder and get that very same info so they know what they will need to bring to the table. Then plan a time to actually go down to the lein holder and do everything there.

I did this with my last car 5 years ago but since I was financing as well I had the seller come with me to my credit union after my loan was approved with the remaining amount owed on his note aside from what I was paying him. Then my credit union took care of the rest and wired their money from my loan and the sellers check to his bank so the title could be transfered to my credit union. We signed all of the papers there at my credit union. ince you are paying with cash or check you may get the title transfer done at the bank then go down to the title place on your own.

Call all 3 places involved: seller, lein holder (the true seller I suppose), and the registration place. Make sure everyone is on the same page. It's up to the lein holder to tell you what it is that you need to do. The registration place is probably unnessesary.

It may sound like a pain but it's actually pretty quick and easy.
post #9 of 28
Quote:
Originally Posted by dsaucone View Post
In NY we have the titles even if there is a lien on it. But I know some states the bank will keep the titles. I would go with the seller to the lien office and complete the transaction there with the car waiting outside for you.
everyone PHYSICALLY has the REGISTRATION paper work reguardless of lein or not. I have the REGISTRATION to my car with my name and sig on it sitting in my glove box BUT until it's paid off in June of this year there is a little line above my name that states Washington State Employees Credit Union holds ownership (title) of my car.

You can have the title without being the legal owner.

I am the REGISTERED owner and sign the registration when I get my new tabs but my credit union is the LEGAL owner. There are 2 different kinds of car ownership. You can only be both the registered owner and legal owner if there is no lein. No registration place will allow transfer of title without the lein first being paid either by private owner or secondary lein holder. I believe this is the case in all states. Otherwise it would not be secured credit. Someone could finance a $20,000 car, sell it legally to someone for $10,000 (leaving no liability to the new owner for the unpaid lein amount), then stop making the payments and have nothing for the lein holder to legally repo because it was legally sold to someone else. It just wouldn't work that way because the lein holder would have nothing to recover in case of non payment.

The ONLY way I could see someone selling a car they still owe money on is if they got a cash advance from an unsecured credit card and used that money to buy a car. In that case they would legally own the car and be stuck with the credit card payments reguardless of what happens to the car. People don't often buy cars with credit cards however. Unless they have LOTS of open credit and a card that allows them to draw that much in cash (unlikely), or the car was cheap. But this is a moot point because in this case there is no "lein" in the first place. Just someone crazy enough to buy a car with a credit card.
post #10 of 28
Quote:
Originally Posted by FondestBianca View Post
everyone PHYSICALLY has the title reguardless of lein or not.
Not in Indiana. The loan provider PHYSICALLY has the title to the car until you make your last payment. After your last payment, they mail it to you, then you have to take the title to the DMV and get a new one issued in your name... which takes a certain amount of time. We pay cash for our cars, but my mother had some issues with a car because the title had not come in several weeks after paying off the loan and it was a headache tracking it down.
post #11 of 28
Quote:
Originally Posted by velochic View Post
Not in Indiana. The loan provider PHYSICALLY has the title to the car until you make your last payment.
Not in PA, either. I have the title to my car (paid cash) but DH does not have his.
post #12 of 28
Quote:
Originally Posted by velochic View Post
Not in Indiana. The loan provider PHYSICALLY has the title to the car until you make your last payment. After your last payment, they mail it to you, then you have to take the title to the DMV and get a new one issued in your name... which takes a certain amount of time. We pay cash for our cars, but my mother had some issues with a car because the title had not come in several weeks after paying off the loan and it was a headache tracking it down.
ya, that....I have a registration, that's all
post #13 of 28
we just went through this ourselves. And we gave the check to the owner (one check for the remaining balance of the lien, and 1 check for the difference to them. We received the title in 3 weeks. Now because it took so long for us to get it, we have to pay and extra fine to the DMV and our registration expired and we had to drive with expired tags for 2 weeks.

I think its normal. If i where you i would make sure you know their address, and get a written bill of sale with both parties signatures, and copies of their drivers license. As long as you have that bill of sale and you have proof of payment then even if they dont give you the title you can fie with the state and they will give you one. (but its a big PITA)

Oh and not all lien holders are local, ourr title was in like Missouri or somewhere because it was through BMW lending. Which is where the original owner worked, but here at a local dealership.
post #14 of 28
Yeah actually in WA-we only have the registration. We do not have the actual "title" in hand-the bank has it.

It's just like most places, the car will say you are the registered owner and that the bank is the actual owner. Unless of course you are the owner. I had a loan on a car here in WA and never got the real title until I paid off the car.

To the OP if you want the car you should drive the 2 hours, it could make for a lot less headaches in the future.
post #15 of 28
Yeah , you really need to complete the transaction at the leinholder's office. I did this when I sold my work truck that had a lein. I met the purchaser at the bank my loan was through, he paid me, I paid them, and they signed off on the title.
post #16 of 28
Quote:
Originally Posted by FondestBianca View Post
everyone PHYSICALLY has the title reguardless of lein or not. I have the title to my car with my name and sig on it sitting in my glove box BUT until it's paid off in June of this year there is a little line above my name that states Washington State Employees Credit Union holds ownership of my car.

You can have the title without being the legal owner.
Like others said in NY I had the title to my car and there was a little spot that said *lien ESL FCU* with all their information. Then when I moved to NC I still had $1,000 left to pay on my car and when I registered my car there the tag office took my title, made a NC title and mailed it to ESL in NY. When I paid off my car, ESL mailed me the title. When I came back to NY and registered my car I got a NY title again, only with no lien!
post #17 of 28
We sold our escape with a lein on it.


They made out the check to the lein company, with the balance to us. It was no big deal. Ford Auto Credit owed the lien. She paid with a cashier's check.

We kept insurance on the car until everything was cleared and finished.

The other car we sold with a lein, we did all the paper work in the Credit Union who was financing the purchase for the buyer.

If you have a credit union... use their auto finance dept. Even if they are no in any part of the transaction, they can and will help you.
post #18 of 28
Quote:
Originally Posted by velochic View Post
Not in Indiana. The loan provider PHYSICALLY has the title to the car until you make your last payment. After your last payment, they mail it to you, then you have to take the title to the DMV and get a new one issued in your name... which takes a certain amount of time. We pay cash for our cars, but my mother had some issues with a car because the title had not come in several weeks after paying off the loan and it was a headache tracking it down.
crud.... I meant to say "registration". Thats what I was thinking of! I went back and replaced the spots i used the incorrect term... now my post actually makes sense. glad you caught that so I could fix it!
post #19 of 28
Thread Starter 

Update

I called the local auto tags place and they said the basic process was this:
* Go to his bank, pay off the loan and pick up the title from them, then
* Go to an auto tags place to get the title transferred over, pay sales tax & title fees

I was wrong about what bank the lien was at. I thought it was at a place which was two hours away, but apparently it's at Chase Auto. I called Chase Auto and they aren't agreeing to the above process. They say that they are only willing to mail out the title after payment has been made. They only have an electronic title, and they'll then ask the state to mail us a title after the lien is clear. I'm not excited about this, however, they did say that we could call the bank, buyer and seller on the phone at the same time, and they would agree to mail the title to me and not to the seller. That makes me feel better, but I still would like to have the title in hand. So the title wouldn't ever touch the seller's hands. Chase Auto said it is not their policy to have the title ready for payoff & pickup at a local branch. Argh.

Is that good enough, or do I need to drop this deal altogether? And what is this seller to do, if we drop the deal? (Not our responsibility, but I'm curious!) Is he then simply unable to sell the car with Chase Auto having this policy? The seller is feeling stuck, and I feel bad for him, but no so bad as to make unnecessary risks! But maybe having Chase agree to mail it directly to us is good enough?

Aven
post #20 of 28
What we did as sellers.

1. buyers took car and all signed registration paperwork and bill of sale

2. we took check and overnighted to bank who held the title along with fees for the paperwork to be overnighted to new owners (we are in NH, bank holding title made us send to office in CA)

3. title arrived 3 days later to new owners who registered the vehicle
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