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Selling a car with a lien privately

  1. May 7, 2013 #1

    Physics_UG

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    I owe $4700 on my car and need to get rid of the payments so I am selling it and getting something cheaper with the difference between what I owe on my current car and what I am selling for. I obviously don't have the money to pay off the lien.

    I am selling for ~$8000. How do I go about this while keeping both parties in the sale worry free?

    Do I take the full amount ($8000), pay off the lien, and then send the lien release documents with title to the buyer? Or do I have just take what is owed on the car from the buyer and then after the lien is paid off take the rest of the money.

    It is confusing to sell a car with a lien on it.
     
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  3. May 7, 2013 #2

    Office_Shredder

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    I don't have any direct experience, but I have heard that you and the buyer can go to the bank holding the lien and do everything there in one sitting (the paying and the title handing over etc.) so there's no weird point where the buyer pays the bank to give you the title and hopes you hand it over
     
  4. May 7, 2013 #3

    Physics_UG

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    Problem is the lending agency does not have a local branch.
     
  5. May 7, 2013 #4

    Evo

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    Contact your local DMV and ask, they might even have it posted on their website. Also, check the company that holds the lien because they hold the title, not you. Between the two, you should get the answers you need.
     
  6. May 7, 2013 #5

    Physics_UG

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    I checked with the lien holder. They said to take the full amount from the buyer, pay off the lien, and then when the document comes in the shows the lien is paid off go to the SS office and get a new title. Then transfer the title to the new owner. This requires a leap of faith from the buyer though.
     
  7. May 7, 2013 #6

    Evo

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    Everything on the internet says the same thing.
     
  8. May 7, 2013 #7

    Physics_UG

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    Yeah. Well, I will give it a shot. Thanks!
     
  9. May 7, 2013 #8

    MarneMath

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    I've done this may time. If you're privately selling your car, it does take a leap of faith from the buyer. Usually, I tend to get a power of attorney authorizing them to do anything they need to do with the title of car until the title is transferred. It's a safety net for the person.
     
  10. May 7, 2013 #9

    Evo

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    How can they legally do anything without the title?
     
  11. May 7, 2013 #10

    MarneMath

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    I would give them a notarized copy of the title, a power of attorney, and they went on there happy way. I mostly did this because I was in the military and we have to register our cars on post. If the title is not in your name, then you need the persons whose name is on it power of attorney authorizing the car to be registered. I imagine there are other situations where a person would need a power of attorney to do something with their car.
     
  12. May 7, 2013 #11

    Evo

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    Deceptive, it's not valid, but yeah, if it closes the deal. caveat emptor
     
  13. May 7, 2013 #12

    Vanadium 50

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    One could use an escrow service. Less good, but better than nothing, would be for the buyer to supply two checks: one to the lienholder and one for you.
     
  14. May 7, 2013 #13

    Physics_UG

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    yeah, I thought about this too. So the escrow service simply holds the checks for both parties?
     
  15. May 8, 2013 #14

    BobG

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    Yes, the buyer will need the power of attorney or bill of sale in order to get a temporary tag for the vehicle (ask what's needed before going down to the DMV). Once the bank releases the lien, the buyer can get a permanent tag. It's not all that different from buying a car from a dealer, except the dealer/lender is handling getting the paperwork to the DMV so the buyer can get their permanent tag.
     
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