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Buying Used Car With Lien

 
Old 04-18-2013, 09:11 AM
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Originally Posted by PuristDriver View Post
Since in this case it's Honda Finance, I can't work it out with the bank in person. Others may confirm, but I don't think I can walk into a dealer and have them handle the transaction like another B&M bank.
actually, i think you can deal w/honda financial at your local dealer. it's a good thing the lienholder is honda financial. might be able to just go to your local dealer & do the payoff. just make sure you find out how release of the title will be handled... going directly to you or back to current owner/seller first.
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Old 04-18-2013, 10:11 AM
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I called Honda Financial and they said I couldn't just walk into a dealer with the seller. I'm trying to convince the seller to pay off the lien first while I put a small deposit down and wait for the title in his name to arrive before closing out the deal.
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Old 04-18-2013, 11:30 AM
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Originally Posted by PuristDriver View Post
I called Honda Financial and they said I couldn't just walk into a dealer with the seller. I'm trying to convince the seller to pay off the lien first while I put a small deposit down and wait for the title in his name to arrive before closing out the deal.
my bad. i think i'm confusing transferring an extended warranty at the dealership.

anyways, seems like you have 2 good options:

1. talk to Hond Financial directly (or get the seller to do it) & arrange for you to pay off the lien directly BUT that the release of lien & transfer of title will at least be processed & transferred to you upon payoff (if the actual title won't be immediately available to you)

2. find out where the local (to the seller) Honda Financial office is & meet the seller there to handle the lien payoff & other associated steps.


for me, i could've just trusted my seller in TX to pay off the lien, but i didn't want to do that. i also did not just want to pay off his credit union & wait for the title to be mailed. the majority of lien sales involve titles being mailed at a later date, but i'm well..... a little obsessive. lol seriously, i wanted everything addressed & in my hands/name, ASAP, esp since i was driving the car all the way back to CA.

good luck. it should be a little easier since the lienholder is Honda Finance
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Old 04-18-2013, 07:06 PM
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I've purchased and sold cars with liens on them. A well drafted Bill of Sale with witnesses (Notary?) can go a long way as long as you can verify the seller. It helps a lot if you are able to draft two checks to the institution and to the seller.

Make phone calls, do research, and walk away if something does not seem right. It really isn't that difficult at all.
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Old 04-20-2013, 07:28 PM
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I work for the dmv bro, if the lien is on the title or if the guy does not have a title the lien holder must sign the release of liability. If the title is a electronic title then he wont have the title and the Duplicate title form must have a signed and notarized release. To be honest its more of a headache then anything if the guy signs the papers and never gets back to you. then we need a bond for the value of the car after you show that you tried to contact him.
msg me bro if you have any questions i'll walk you through it
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Old 04-20-2013, 09:01 PM
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I was able to convince the seller just to pay off the lien first. I've put down a very small deposit for the ride after test driving it and agreeing on the price. We've got all this on paper. The risk is that he may back out, but I think this is a better situation overall.
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Old 04-22-2013, 03:07 PM
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smart move, always make sure there isn't a lien on the title.
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Old 11-04-2017, 05:54 PM
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This seems like exactly the thread I'm looking for. I am looking to buy a used car from a private party with a lien on it, and I don't know what the process is. I've read all the posts in this thread and it is still not clear to me. So my situation is that I am paying less than the lien, so supposed the lien is $100 and I am only paying $50 for the car, how does this work? I agree that the best way is for the seller to clear up the lien first, but I am not sure he is willing to go through all that trouble because other buyers may be more willing (or more knowledgeable) to buy the car with the lien. Thanks.
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Old 06-22-2018, 12:57 PM
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Sorry to bump an old thread, but I have been looking into this in CA and think I've found a solution for electronic titles (according to my bank and the DMV).

If you get a loan for the car you're purchasing that has a lien, your bank should take car of everything. You go to the bank with the seller with:
-10 day payoff amount (requested from the lienholder prior)
-seller's registration
-pre-approved loan

Once you're there, they do:
-notarized bill of sale
-release of interest by the seller
-they create and overnight a check to the lienholder with proof for the seller - because it's a bank doing this you have assurance the lien will be extinguished
-they create a separate check for the seller's portion (if any)
-at this point (always good to clarify with both the lienholder and your lender) the lienholder transfers title to your bank, and the person who sold the car released their interest so they are taken off the title (this make take 10 days, but the bank is responsible so there's no need to trust the seller to sign & send documents)
-your bank creates and sends all necessary paperwork to the DMV where you or your bank (depending on your state of residence) are the registered owner with a lien

This is only requires a trip to your bank, not the sellers.

For a private party sale, you have to pay of the lien at the sellers bank first.
-you also do a bill of sale and release of interest
-the bank releases the lien to the state, which then mails a title to the seller within 30 days
-the seller has to sign the title and provide it to you (otherwise you don't own the car). This is obviously the risky step.

It was recommended that if doing a private party sale where there's a lien and electronic title, have the seller sign a single issue/single use power of attorney for purpose of transferring title, so you can at least apply for a duplicate if they are not cooperative.

Additionally, escrow.com is bonded for similar transactions. I haven't used them yet but they were recommended by a title company in SF for smaller transactions. The cost is approximately $200 for a $15-20k transaction, and they will follow instructions of however you want to structure the contract. For example, the buyer pays off the lien and transfers the seller's portion to of the payment to escrow.com, once the seller gets the title, signs and communicates it to the buyer, the money is released. I searched for a regular brick and mortar escrow service but the cheapest I found was $3k.
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Old 06-22-2018, 04:48 PM
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Originally Posted by ragtophardtop View Post
Sorry to bump an old thread, but I have been looking into this in CA and think I've found a solution for electronic titles (according to my bank and the DMV).

If you get a loan for the car you're purchasing that has a lien, your bank should take car of everything. You go to the bank with the seller with:
-10 day payoff amount (requested from the lienholder prior)
-seller's registration
-pre-approved loan

Once you're there, they do:
-notarized bill of sale
-release of interest by the seller
-they create and overnight a check to the lienholder with proof for the seller - because it's a bank doing this you have assurance the lien will be extinguished
-they create a separate check for the seller's portion (if any)
-at this point (always good to clarify with both the lienholder and your lender) the lienholder transfers title to your bank, and the person who sold the car released their interest so they are taken off the title (this make take 10 days, but the bank is responsible so there's no need to trust the seller to sign & send documents)
-your bank creates and sends all necessary paperwork to the DMV where you or your bank (depending on your state of residence) are the registered owner with a lien

This is only requires a trip to your bank, not the sellers.

For a private party sale, you have to pay of the lien at the sellers bank first.
-you also do a bill of sale and release of interest
-the bank releases the lien to the state, which then mails a title to the seller within 30 days
-the seller has to sign the title and provide it to you (otherwise you don't own the car). This is obviously the risky step.

It was recommended that if doing a private party sale where there's a lien and electronic title, have the seller sign a single issue/single use power of attorney for purpose of transferring title, so you can at least apply for a duplicate if they are not cooperative.

Additionally, escrow.com is bonded for similar transactions. I haven't used them yet but they were recommended by a title company in SF for smaller transactions. The cost is approximately $200 for a $15-20k transaction, and they will follow instructions of however you want to structure the contract. For example, the buyer pays off the lien and transfers the seller's portion to of the payment to escrow.com, once the seller gets the title, signs and communicates it to the buyer, the money is released. I searched for a regular brick and mortar escrow service but the cheapest I found was $3k.
I did this with my car back in 2011. USAA was the bank on record on the lien, and I had taken a risk paying off the car from my bank to his with a electronic wire directly to the account. USAA does not keep a paper title and we had to wait for the title to be made in physical form from the DMV, which the seller of my car managed to rush order. On top of that, I had to talk to my bank to get a loan for the car as well. It took a lot of trust on his part and mine, as the whole process from agreement to buy to exchanging title and money took about 3 weeks. Glad we both were able to get it done and was happy everything went along smoothly.
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