Jah2000

I've noticed many decent looking S2k’s on CL are still under Lien Title. After contacting some seller’s for a car I'm interested in, some of them tell me their car is still under a Lien/Loan (navy federal, credit unions...). They tell me that if I like the car and decide to buy it, then I have to go with them to the bank, complete the bill of sale, and then the bank mails the title-pink-slip to me.

What are the negatives of buying a car this way and under a Lien still?

Does their bank, or whatever credit union, that has the physical title, really mail you the title pink slip in a timely fashion? Or do they lag in mailing you the title? It sounds a bit concerning to me…shelling out a lot of money and still worrying and needing to wait for the pink-slip.

I asked my dad about it (a house broker and realtor), and he said, “why would a +10yo car (especially one that’s relatively affordable and cheap) even be on a Lien still? It should’ve been paid for ages ago.” Which got me wondering too and what he said makes sense... it’s already been 10-15 years since it’s been bought, and only $35k'ish brand new. So shouldn’t it be totally paid off by now?

If I were to go ahead and purchase one of these s2k's on a Lien, and once I pay the seller and complete the bill-of-sale at the bank or credit union with the seller, will the title automatically change from “On Lien” to “Clean Title” and will they mail me the physical pink-slip title?

Any other negatives (or positives, if any) about a car on Lien? Has anyone here bought an s2k that was still on a Lien title?
I'd like to hear you experiences and feedback on it.

Jarshie

because some people buy these cars for 10k+ and a good percentage of people don't have that money laying around.. I cant tell you much except for my experience selling a bike with a lien on it.

the process was pretty much the same as you described. I filled out a bill of sale, he gave me the cash and I gave him the keys to the bike. he was able to take the bike home, so he had his side of it covered as well as a BOS which if filled out properly will hold up in court (for either side). I went to the bank paid off the bike and paid a minor fee (was like 40 bucks) to have my title processed in two hours (vs a supposedly typical 30 day wait). I then went to my local dmv and picked up my new title. met up with the guy and handed over the title... and that was it.

it can be a bit risky, but as long as you make sure both yourself and the other party are covering both bases, then there shouldn't be any problems. Things you may want to do is ask for documentation showing how much he still owes to make sure he cannot pull anything fishy. If the title is not able to be transmitted electronically, then you can still have it rush processed and should be mailed out the next day. Use cash for the transaction so you don't have to wait a few days for the bank to clear it. cant hurt to go with the seller to the bank, as that's another thing to help protect you, in the event that something were to go wrong.

sorry if this sounds jumbled, kinda rushed to finish this, as I was getting ready to leave for work

car compulsive

Generally, going to the bank or credit union that holds the lien with the seller and paying in cash is the best way to conduct the transaction. In states where the owner holds the title and the lien is notated on it, the bank can usually immediately give you a release of lien letter so the DMV will transfer the title to you. In states where the bank holds the title, you'll have to wait for the title to be mailed.

Whenever doing a private party vehicle transaction, buying or selling, find a simple bill of sale online, fill it out and have both parties sign both copies. The form needs to have both names and addresses (check against driver license), VIN, make & model of the vehicle, sale price, sale date, odometer reading, and any additional items included or excluded with the sale (car cover, extra wheels, etc.) Make sure everything is complete and accurate. If the buyer or seller wants to leave any important fields in the sales agreement blank, refuse to do so or walk away from the deal. You need to have a complete and enforceable copy of the contract if something goes wrong and you end up in court. Don't try to cheat to pay less in sales tax when you register the car or avoid a registration delay penalty if you have to wait to receive the title from the bank. Make sure the person you're buying the car from matches the name on the title or the person has a power of attorney to sell the vehicle. A lot of "private sellers" are curbstoners (unlicensed dealers) who buy private party cars, convince the seller that they'll take care of the title paperwork, and flip the cars without registering them in their name.

I am not a lawyer nor do I play one on TV. I just buy and sell too many cars and have made mistakes in the past.

Jah2000

Wow..sounds a little complicated and like extra things I don't want to really deal with. The cars in question with the liens so far, are ugly and too modded anyway. I think I'll just stick with title-in-hand sellers.

jimmy-buffett

If you're paying cash, it's a little bit more of a hassle because you have to deal with their bank. But the difference is marginal. If you're getting a loan, it's actually a little easier because your bank works better with their bank than with them as an individual to handle the title transfer stuff.

I wouldn't hesitate to buy a car with a "lien title", all that simply means is that the owner hasn't paid it off yet. In some ways it's actually safer for you as the buyer, because the bank has the title and there's no concerns that the seller is sketchy.

Ask your dad why a 50 year old house owned by a 35 year old couple would still have a mortgage on it. Hint: the math makes the answer obvious.

Another answer: I paid $18K @ 2% on my '06 in '12. Compared to having the money in the bank (or actively invested), 2% is practically free money. With today's loan rates, it's hard to justify paying cash for anything.

You don't pay the seller, you pay the bank. The bank owns the car. If the seller owes $5K and you pay $10K for the car, you pay the bank $10K and the bank refunds the difference to the seller.

The only potential area of concern is whether or not the seller owes more than what you're paying them (i.e. "upside down on the loan"). When you go to the bank with the seller, have the bank's representative confirm for you that the price you're paying is higher than the principle owned on the loan. If it is, buy with confidence. If not, then request that the seller close the loan with you present with money out of their own pocket.

car compulsive

The lien part is simple - go to the bank or credit owner that holds the lien and handle the transaction there. They will know what to payment wise. The complication is correctly handling any private party sale so you're not screwed. My state recommends that, if possible, both parties meet at the DMV (secretary of state office here in Michigan) and transfer the title. The problem with that is there are fewer, more crowded offices with inconvenient hours.

When you buy a car from a dealer and/or trade one in, they handle all the legal paperwork. Of course, you pay for that convenience in fees, lower trade, and higher purchase prices.

caraficionado

I bought my car off a lien and it's a process that requires some extra effort and carries a bit more risk. I would go through it only if car is worth the extra effort, if you trust the seller and and if you're able to negotiate further on the price (get it below market value).

I first got a PPI of the car and made sure the car was in good order. I found out how much was owed on the car and made sure that the combination of agreed upon price and the seller's funds took care of the total amount. We then went to the lien holder (typically a bank or credit union) and paid directly. I then got a bill of sale and took possession of the car. I had to wait a few weeks to get the title.

Good luck in your search

Jah2000

Thanks for all the advice. Just the complicated and lengthy replies alone make me even more wary now. I know it's fine for some of you.. but for me, I will definitely avoid Lien Title. "Extra effort" and "Risk" is something I don't want to risk or even deal with, not even in the slightest.

Kirk180

Buying from a lien is a piece of cake. I've done it. I wouldn't necessarily take that as a fault in the sale. Not sure what the fuss is. You deal with it, and it's done.

Comes down to whether or not that deal is good. Not whether or not the title has a bank lein on it.

Motonaut

I would actually not mind buying a car that has a lien, mainly becusde the bank/credit union will not issue a loan on a car with a bad title. I got 1.99% from my credit union and they verified that the car history was clean before issuing the loan. Also I would assume many new s2k buyers are taking out loans for their cars, especially since many are younger and probably don't have 12-20k disposable cash laying around.