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Old 05-07-2003, 06:38 PM   #1
Porsche914boxer4
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Default Buying a car from a seller with a lien

I was wondering if you guys have ever bought a car from someone that was making payments on it. I am sure this is a common occurence, but I am unsure how to go about it, should I sell my car.

Say I have $10,000 in debt to my lienholder (holding the car title)

The buyer buys my car for $10,000.

What happens next? My lienholder said they release to lien electronically to the DMV, then the DMV prints out a new title which is then mailed to me.
I am sure that process of waiting for the DMV to do this takes weeks, so how would I go about selling a car to someone who wants to title the day they purchase it?

What have your experiences been when buying a car that has a lien on it in California?

Thanks a lot guys, I appreciate any help you can give me.

Eli
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Old 05-07-2003, 07:00 PM   #2
Eric SS
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Basically, I think The buyer pays you the money and you give them the car. You then send the money into the lienholder. They release the title to you and you then get it transfered to the buyer of the car. Just make sure you trust each other.

At least, that is my understanding.
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Old 05-07-2003, 07:01 PM   #3
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if it is a bank that is your lien holder you can go to them. They have a paper that will tell you everything you and the buyer needs.

if it's a dealership they should have the same.

Basically you generally have to have the car smogged with 60 days of transfer. you'll need that. You'll need proof of current registration.

If the person wants the pink slip in his hand upon transfer I believe you will have to be at the location of the lien holder. Generally the lien holder will fax a copy to the person or the persons loan agent.

but like I said before go to your bank/dealership. They will have the info to walk you step by step through it....I just picked up a form myself from my bank this week.
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Old 05-08-2003, 09:38 AM   #4
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I and N8Shon just did this (He bought my Rex.)

He gave me a holding deposit.

His bank sent a cashiers check to Chase for the payoff.

He came and picked the car up from me with a cashiers check from his bank for the balance.

Hope this helps.
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Old 05-08-2003, 01:28 PM   #5
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when i sold my RSX (in NJ), the buyer and i went to my credit union, and he handed me a cashier's check for the amount. i paid off the loan, and got the title. signed it over to him, and there ya go.

i called a week or so ahead to ask them to have the title on hand (most CU/bank brances don't keep titles on hand). i don't know if this will work for everyone, but it worked well for me.
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Old 05-08-2003, 01:32 PM   #6
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Gonna get a STi, Eli?
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Old 05-08-2003, 05:08 PM   #7
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seller drives car to buyer.
make up bill of sale.
buyer makes out check to lien holder.
some states give title to you from the beginning with a lien stamped on it. if so, give this copy to the buyer, and once the lien holder receives payment, they will issue a notice of lien release.
give this document to buyer, who can then title the car with the old title along with the lien release.
if your bank holds the title, buyer and seller write joint letter(notarized maybe)authorizing bank to send title to new owner.
buyer and seller can send off certified funds together via overnight service.
buyer is protected because check is made to lien holder.
seller is protected because buyer cant register or title car without a lien release and/or title.
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Old 05-08-2003, 05:30 PM   #8
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Quote:
Originally posted by Coati
Gonna get a STi, Eli?
I was hoping no one from SCIC would come in here. hehe


Don't know...maybe a beater for like a year until the old CCards are paid down. I could buy an M5 with my debt right now. D'oh!

Eli
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Old 05-19-2003, 09:49 PM   #9
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This should be a sticky. This question comes up regularly in OT.
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Old 05-19-2003, 10:12 PM   #10
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I know...I asked it today!
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Old 05-19-2003, 10:54 PM   #11
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Well, just so you know each state is different.

I spoke with my bank here in Ma and since they do things electronically now it takes longer.

The process is kind of the same, but I don't know how I'm going to sell my car.

They told me once I pay the loan off (with a certified check from the buyer since I can't pay it off myself) it take 3 - 5 buisness days for them to mail me the title. Who the the heck is going to give me a check for ~$18K w/o a title? I know I wouldn't if I were a buyer.

My thoughts for my situation:

1. Once check from buyer is recieved, write up bill of sale and hand keys and the car over to him. At the same time take off my plates and cancel my insurance policy. Have the buyer insure his new car at that time. The buyer can't register the car here in Ma w/o a title though, so they are stuck until I get the title to them.

That's the only way I can think of doing it. My other option would be to accept the money and keep the car on my insurance until the title shows up. I wouldn't release the car to them if it were on my insurance policy. I don't know who would be willing to do that. Not me (if I was a buyer).

My only concern now is handing the car over and still "owning it" since the title takes ~ a week to get. If something happens to it while in the hands of the buyer (even if it is on his insurance policy), shrug...

Paul G.
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Old 05-19-2003, 10:56 PM   #12
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I just realized I can make this a sticky.

Paul G.
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Old 05-22-2003, 10:33 AM   #13
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I can only give you my experience; No two States are the same, but thankfully, most bank procedures are the same….. They want their money!

First thing to do is to call the bank and get the payoff amount. Usually they will give you an amount that is good till a certain future date. Meaning that as long as the bank gets the given amount in their hot little hands by that date, it will pay off the loan. This is where sticky part comes to play. With most banks that hold the original title on file (some states will not allow them to hold the original, like OK, in this instance all the bank has is a “lien card” that they sign off and send to the original owner.) Either way, you need THAT document (signed off title or lien release) to transfer ownership.
Even though the person gave you the money and took the car, he or she does NOT have FULL ownership of the car until the paperwork is completed and filed with their respective state. THIS IS VERY IMPORTANT! Make sure that ALL the paperwork is completed and filled out CORECTLY before you send it off to them. Also make sure you have a signed, dated and witnessed bill of sale before the car leaves. Usually, what I do is hold back a small amount of the selling price ($150 to $200) to ensure that I do get the title. Once I get the title, I send them the money. But, that is entirely up to you…..

GOOD LUCK!
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Old 05-28-2003, 11:47 AM   #14
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I called my finance company and asked for the payoff on a date a few days away.

Then I had the buyer cut me two money orders, one for the payoff payable to the finance company, and the rest to me.

We then completed a bill of sale, filled out the DMV forms, etc.

The buyer took care of smog.

And that was that.

A few weeks later, the finance company sent me the pink slip, which I forwarded to the buyer.
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Old 06-07-2003, 03:03 AM   #15
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Eli,

When I bought my Silver GT, the original owner owed about $10K on the car. I drove up to Irvine, met him at his credit union with a certified cashier's check, executed a bill of sale, completed the DMV paperwork which was notarized on the spot by one of the credit union employees, made a copy of everything and drove the car home.

The credit union forwarded all the paperwork to the DMV who, because I was not going to be putting a lien on the car, issued me a paper title about 5 days later. Had I put a lien on the car, the title would have been "electronically" transferred from his credit union to my lien holder but my bank would not receive a paper copy. In that scenario, once I paid off the loan, my bank would electronically "release" title and the DMV would issue me a paper title.

Hope this helps.

Br, Dale
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Old 06-07-2003, 03:11 PM   #16
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do I take my plates off once he takes ownership? I would assume so.. but how would he get the car home? We arent in the same state either....
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Old 06-08-2003, 03:39 AM   #17
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AFAIK, each state has separate regs about license plates. Some you "buy" the plates and attach them to whatever car you want to have registered under that plate number. Other states, the plates transfer from owner to owner, remaining with whatever vehicle was first registered under that plate. The exception being the personalized plates which, IIRC, can transfer from car to car. In your case, do your plates typically stay with your car when you transfer it? Do you hold the actual title to the car now?

I've previously purchased a car in Maine, that was registered in Virginia (the registration was current) and driven it to California where I titled it in Pennsylvania but put California plates on it. My "registration" that I used to transfer state-to-state, consisted of the car's title, a bill of sale, and the previous owner's registration. That was 20 some years ago and things have probably changed since then.

As I mentioned, each state is different, but I believe there is a provision that temporarily allows you to take title of a car in one state (providing that it is currently registered) and drive/transfer it to another where you ultimately register the car. You'd want to check with the DMV where you're buying the car and where you'll ultimately register it to see what their requirements are. I've been able to do this on-line through the individual DMV websites.

Br, Dale
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Old 06-08-2003, 08:50 AM   #18
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Good question.
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Old 06-10-2003, 03:26 PM   #19
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I just did this with another nasioc member. I bought his WRX, he bought my 240SX. He owed a good chunk on the WRX but even subtracting the "sale" price of my 240, he still got some leftover.

So we went to my CU, they cut his lender (Chase) a check and mailed it direct, gave me a check for the DMV and a check to him for the difference in sale - payoff amount.

We both filled out release of liability DMV forms for our respective cars (You have to within 5 days of sale). I'm still waiting for Chase to send me the title, its only been a week.

-Cameron
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Old 06-19-2003, 08:11 AM   #20
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I know my credit union does it like this when financing (and they can do it from your account too if you are paying cash)...

They issue what is called a draft. Essentially it is an envelope that looks like a cashiers check. This is given to the seller / lien holder. It is a promise from the bank that the money will be provided as soon as they get the title. The seller / lien holder mails the title to the bank in the envelope and gets the money right away... not sure if it is wired or what... never delt with it after handing over the draft.

I will give you this advice though... be very careful when buying a car with cash from someone who still owes money. I bought a '92 Miata 2 years ago from a guy desparate to sell it. It was his son's car and the son moved to Alaska and left him the car to sell. I offered him $4k and he said ok. He owed $4500 but he said it was fine, he had been trying to sell the car for a while and knew he was a little upside-down. I gave him $4k cash, got a bill of sale and took the car. He agreed to keep insurance on the car until I got the title. TWO MONTHS LATER (I called him at least once a week for a status report, at which he said he didn't know what was taking Mazda Financing so long) I found out that he had just continued making the payments on the car, had dropped the insurance coverage, and when I confronted him he confessed that he had used my money for bills...

Well, I guess he realized that prision was not going to do anything for his complexion, and his only other options were the hospital or paying off the car. He agreed to sign a legal document I had written up essentially admitting what he did and that if I didn't get the title in another 15 days he would begin making me payments with interest (I think it was like 20% too) on my $4k. He must have figured out that I was not playing and quickly figured out a way to get the money to pay the loan off because I had the title in 15 days.
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Old 06-19-2003, 12:55 PM   #21
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That's quite a horror story ForesterPerformance. I'm a little weary of a purchase I might be making. I'm interested in a WRX from Connecticut (I'm in Minnesota) and he has been willing to arrange for shipping it to my door. So any of this direct transfer of paper work wouldn't work in this situation anyway, all would be done in the mail and wiring money...
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Old 07-10-2003, 01:00 AM   #22
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So what would happen if you sold your car and there was still money oweing on the loan?. Can you sell the car for less then what the loan is worth, turn over the car to the new owner, then pay the rest out?. That's my big question....
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Old 07-18-2003, 08:40 PM   #23
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Quote:
So what would happen if you sold your car and there was still money oweing on the loan?. Can you sell the car for less then what the loan is worth, turn over the car to the new owner, then pay the rest out?. That's my big question....
You'd have to call your bank, but I don't think so. They can maybe give you a different loan to cover the balance on the autoloan not paid off, and you'd essential not have an auto loan anymore, and they could release the title to the new owner.

Paul G.
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Old 08-31-2003, 08:27 AM   #24
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simple, you send in the balance along with the buyers check.
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Old 09-04-2003, 03:08 PM   #25
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I sold my car still owing money on it a few years ago.

The buyer had a cashier's check payable to the loan company and we both went to a FedEx drop-off box where we both witnessed it being sent.

He gave me a separate cashier's check with the remaining balance, and I gave him signed DMV documents releasing all claim and responsibility for the car.

It actually worked out very well, but I was lucky in that he worked at a bank doing auto loans, so he was very familiar with this kind of thing.
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