TWY

Hi
have done a search thru the forums looking for some specific advice for the buyer of a private car sale.

If the existing owner owes money on the car via some car loan or similar - who officially is the "owner" of the car (loan company or the owner)? If we were to consider buying a car with outstanding finance - is this a big No No... or do you need to employ some specific measures to ensure finance is paid off by seller...??

Am curious but dont want to get stitched up if the car/documentation etc looks pukka.¨
Thanks

paddingtongreen

The rules vary by state. But if you belong to a car club, they can help'

Arizona Wurzel

Here in Arizona if the vehicle is being financed, then the bank or whoever is loaning the money will put a Lien on the title,they are the owners of the vehicle until the loan has been paid off.Not sure if this applies to all states.

Bluegrass Lass

I think this applies to all states. If there is a loan (or lien) against the car, then the loan must be paid off before the car can be transferred to someone else. The lien holder (i.e. American Honda Finance) must be paid in full before transferring the title. You may want to call your local County Clerks office (or whichever gov't agency handles car registration) to understand which steps need to occur before you obtain the title to the vehicle.

Vimto

I thought that you should either get the seller to pay for or if necessary you pay to obtain a Carfax report which would tell you if there was an outstanding loan on the car, also if the person selling the car owned the title, it would also tell you possibly if the car had been subject to any serious insurance claims (wrecked, flooded), it may tell you the odometer reading at various times in its life so you could see if it had been wound back.

paddingtongreen

The car has a title. Here in PA, the title is held from the owner as long as there is an outstanding loan. You cannot sell a car without the title, the transfer mechanism is printed on the title. If they have the genuine title, there is no loan.

I imagine that other states have similar processes.

meauxna

The same in Oregon.. the 'owner' doesn't get the title til the loan is paid off.
They're listed on the title as 'lien holder'.

lapin_windstar

IIRC, a lien is not the same as a loan. A lien is like "dibs" - it's an official notice that the lienholder has a stake or interest in the car.

This is something you need to find out about on a state by state level, from the answers above. In NYS, each car has a title. On the title, if there is an outstanding lien, it will be printed right on there very clearly. You can have the title but still have liens on the car (i.e. you wouldn't have clear title). You can sell a car which has an outstanding lien, but remember that if you buy it, the lienholder's rights come first.

The seller might tell you that they've paid off the loan but they hadn't bother to send in the letter to the DMV telling them that and got an updated title. It's possible, but that's a lot of trust to put in someone, and then you'd have to take their letter and send it into the DMV just to get it removed.

Big D

A lien is indeed a right over the car and there are various ones such as repairers liens as well as finance. However if there is finance secured against the vehicle then the finance company will hold the title until its settled. It is also worth doing the carfax search that has already been mentioned. This process is the same for most if not all states. I know these processes as I have worked for an auto finance company.