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Old 08-08-2009   #1
 
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Default Best way to buy a car with a lien (buyer still owes on loan)

Found a vehicle I want to buy, paying cash. Buyer still owes on his loan, however, and does not have title in hand.

How does one complete this transaction and minimize risk?

Certainly I'm not going to hand over the purchase price of the car and hope I get the car and the title at some point in the future.

I can take the car when I make payment, but what's to say that I'll ever see the title and that it will be clear?

I can pay the seller for what he owes on the loan, take the car, and hold the remainder of the payment back until the title comes in and is delivered.

Or we can try to arrange to get the title sent to the bank and pay it off when it comes in.

This has got to be a common situation - not everyone has the cash flow to pay off a loan before they sell a vehicle - how do people typically complete them?
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Old 08-08-2009   #2
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

In the past I have gotten a money order, and went to the bank with the person so he could get the lein released while i stood there, then sign the title over to me on the spot

disgusted..........
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Old 08-08-2009   #3
 
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

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Originally Posted by King Nothing View Post
In the past I have gotten a money order, and went to the bank with the person so he could get the lein released while i stood there, then sign the title over to me on the spot
That was one of the things a friend loan officer had suggested. We'll have to try to coordinate getting the financing company to send the title to a local branch. Since it's a big company, I'm sure they keep them centrally and I've heard it can take weeks to get them sent out to the local branch office.

Definitely sounds like a safe way to deal.

Thanks.
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Old 08-08-2009   #4
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

Meeting the person at the bank, paying it off in-person and walking out with title in hand from the bank is definitely the safest way.

I would also suggest you see the title before you hand over the cash. The last thing you want is to pay it off in cash, get the title in your hand and realize that the guys 2nd ex-wife who moved to California 3 years ago is on the title also. If the title is in more than one name, all parties must sign off of the title.
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Old 08-08-2009   #5
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Unhappy Re: Best way to buy a car with a lien (buyer still owes on loan)

Quote:
Originally Posted by mooch91 View Post
Found a vehicle I want to buy, paying cash. Buyer still owes on his loan, however, and does not have title in hand.

How does one complete this transaction and minimize risk?

Certainly I'm not going to hand over the purchase price of the car and hope I get the car and the title at some point in the future.

I can take the car when I make payment, but what's to say that I'll ever see the title and that it will be clear?

I can pay the seller for what he owes on the loan, take the car, and hold the remainder of the payment back until the title comes in and is delivered.

Or we can try to arrange to get the title sent to the bank and pay it off when it comes in.

This has got to be a common situation - not everyone has the cash flow to pay off a loan before they sell a vehicle - how do people typically complete them?

Walk-A-Way from the seller or your money
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Old 08-08-2009   #6
 
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

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Originally Posted by a$$hole View Post

Walk-A-Way from the seller or your money
Why? How would one ever sell a car while they still owe on the loan? For some, cash flow isn't such that they can pay a car completely off and get the title in hand from their finance company prior to selling. I don't think it's an unusual or devious situation. Am I missing something?
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Old 08-09-2009   #7
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

Quote:
Originally Posted by mooch91 View Post
Why? How would one ever sell a car while they still owe on the loan? For some, cash flow isn't such that they can pay a car completely off and get the title in hand from their finance company prior to selling. I don't think it's an unusual or devious situation. Am I missing something?
No, it works the same way as selling your house with a mortgage still on it. Can be done, but needs to be done under the correct supervision.

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Old 08-09-2009   #8
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

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Originally Posted by squeak9798 View Post
Meeting the person at the bank, paying it off in-person and walking out with title in hand from the bank is definitely the safest way.
Come on man...mooch91...It's 2009...Let me correct squeak9788, This is the ONLY way to buy a car when a bank still holds the title. Don't even think about doing it any other way.

Quote:
Originally Posted by mooch91 View Post
I've heard it can take weeks to get them sent out to the local branch office.
Again, its 2009....there is no reason for it to take that long, should be able to have it the next day if need be. The guy needs to make a arraingments with the bank to pay off the car. Set a date and make sure they have the title at hand so it can be transfered over to you.
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Old 08-09-2009   #9
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

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Originally Posted by WLDock View Post
Come on man...mooch91...It's 2009...Let me correct squeak9788, This is the ONLY way to buy a car when a bank still holds the title. Don't even think about doing it any other way.
Good advice ^ ^ ^. The person who has the car is only in possession of the keys. They own nothing and should never be trusted with your money.

Deal directly with the title holder or it could turn into a horror story very quickly.


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Old 08-09-2009   #10
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

Quote:
Originally Posted by MACS View Post
Good advice ^ ^ ^. The person who has the car is only in possession of the keys. They own nothing and should never be trusted with your money.

Deal directly with the title holder or it could turn into a horror story very quickly.
I once sold a vehicle I owed a balance on. The new owner took the 3 hour round trip with me to pay it off at the bank. He looked at it as an extended test drive LOL

disgusted..........
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Old 08-09-2009   #11
 
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

Thanks guys, all makes plenty of sense. I am having him call his finance company tomorrow to have the title delivered to a local branch and we'll make the transaction there.

Good advice, not something I've ever had to do before!
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Old 08-10-2009   #12
 
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

The potential for this sale is looking grim...

Talked with the individual's finance company this morning. They are unaffiliated with the local banking branches and cannot send the title forward to a local branch so we can complete the transaction in person.

They faxed me a "payoff authorization" form that the seller can fill out to release the title to me once payoff is complete. In order to use this form, however, the seller needs to provide me with exact payoff information and I still need him to sign over the title once it comes in (even if it gets mailed to me). This is considered a courtesy of "good faith", per the finance company.

Risks with this, as I see it:
  • Seller only gives me part of the payoff amount, I pay off a big part of his loan and I never get the title.
  • Seller refuses to sign title once I receive it.

The finance company couldn't give me any better options.

Seller is willing to let me hold the car in the meantime, until the title transaction is complete.

I feel bad about potentially losing the car, but I feel even worse for the seller. He's in a chicken-and-egg situation: he can't get the title to sell the car unless he gets the funds and he can't get the funds unless he sells the car.

I'm surprised it's this hard.

Last edited by mooch91; 08-10-2009 at 07:43 AM..
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Old 08-10-2009   #13
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Default Re: Best way to buy a car with a lien (buyer still owes on loan)

I just did this......I have my credit union contact his lien holder and settle with them once the seller answers a few questions with my credit union. the seller had to send my credit union $900 bucks because he sold the car for less than what he owed, also had him fill up the tank, change the oil, and have the "inside" as well as the outside cleaned.

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