how to buy a car that has a loan

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Go to the bank with the seller to pay off the car and obtain the title, if the bank or finance company is local.
The seller will not be able to transfer the title of the car to you until the loan is paid off.

Check with the lienholder — the bank, credit union or lending agency that holds the title — regarding what to do.
Whatever you do, don’t hand over your money to the seller, even if he tells you he needs your money to pay the .
Your lender would pay the lienholder and then the seller if there is any money left over.
If the title can’t be readied in time, the lienholder will mail you the title.
The seller needs to sign the title over to you before you can register the car.
The buyer pays the financial institution the money owed, and the seller gets the rest, if there is any.
Some buyers physically go with the seller to the financial institution that holds the lien.
If you’re a bit more trusting, you can purchase the vehicle and allow the seller to pay off his loan with the sales proceeds, still giving you access to the title in the bank (this option isn’t recommended unless you absolutely trust the seller).
The first thing to note is that the seller of a vehicle who stills owes money on it cannot simply transfer the title to you, since it is still partially owned by the company that extended the loan.
If you’ve decided to go with a private seller (or purchase any used vehicle that hasn’t been certified), you will want to conduct a tremendous amount of research on as many aspects of the vehicle as possible.
One thing you want to ensure in the process of handling any transaction involving a pre-existing auto loan is that the amount the seller has to pay off is not somehow included in your negotiations.
You should agree to a price that you think is fair and always make sure the seller settles the outstanding auto loan before you take the vehicle.
Before the seller can legally transfer the title to you, he or she must obtain a lien release from the lender.
If the seller needs to use the purchase funds to cover the lien, both you and the seller will have to travel to the bank or lending location to complete the transaction.
When it comes to buying a vehicle, purchasing from a private seller is often a good idea because you avoid the expenses involved with a dealership or professional car dealer; you cut out the middle man.
A bank officer will facilitate the transfer of the vehicle once you give the purchase funds to the seller.
Write this down or ask the seller to give you a copy of title with the lien information.
If the seller has a lien on the vehicle, be sure this lien is removed before you hand over the cash.
The state recently obtained a $339,000 judgment against a Rochester area used-car dealer that the attorney general accused of selling used cars that had remaining loan balances.
As part of a new car sale, a dealer agrees to pay off the customer’s loan on an existing car, using the vehicle’s trade-in value and possibly additional money obtained by increasing the loan amount for the new car.
But instead, the dealer sells the used car with the loan instact, issuing the new owner a temporary registration (since states won’t register a vehicle in a new owner’s name until the debt is paid).
Blinn has represented consumers in both scenarios, those who have been victimized when trading in a car with an outstanding loan or buying one.
Home >  Money  >  Buying or trading in a used car? Ensure the auto loan is paid off.
If you’re trading in a used car on which you still owe money, it can be convenient to have the car dealer take care of paying off your old loan, as many car buyers do.
If the dealer that engaged in this practice also arranged the loan on the new or used car it sold you, the finance company also may be responsible for your monetary damages, Blinn says.
Alternatively, sell the car privately and pay the loan off yourself, as the Consumer Federation of America advises in its brochure "How to Avoid Auto Fraud" (PDF).
In the meantime the registration expired and I was racking up late fees on the sales tax I owed to the state (around $200 in the end.) I was happy to pay the tax but the CA DMV told me they couldn’t initiate the transfer process without a title! I think the CA DMV is far worse than most though, they give you something like 2 weeks to transfer the title before late fees start…on top of all the incorrect information they gave me which made things worse.
Pay the money and get the original title on which they have endorsed the lien release together with a receipt from both the seller and the lienholder referencing the VIN and marked paid in full.
Years back in FL I sold a car with a lien and the holder was only about an hour a way so we both drove down he gave me the money for the lien I paid and signed the title over in the parking lot.
There is some risk you will have some hassle getting the title from the previous owner down the road – maybe he’s an OK, stand up guy, but just for example what if he suddenly gets sick and dies, or ends up in a big wreck and gets sued, or gets divorced before you get the "pink"? None of this is likely, but, it’s all possible.
A lifelong car enthusiast, Doug’s eclectic vehicle purchases include a Porsche 911 Turbo, an E63 AMG wagon, an old Range Rover and a Mercedes Benz G-wagen.
Doug DeMuro has a wide range of automotive industry experience, from work at a Ferrari dealership to a manager for Porsche North America.
Then, I met the buyer at my bank, he gave me a cashier’s check (I had the bank verify it’s authenticity), deposited in my account and had them take the balance of the loan out of my account.
Seller paid off the loan and waited about 2 weeks until the clean title came through.
I did similar deal with someone that had a loan on it… I agreed to say upfront half (10K in total also) AND I would keep the car in my garage while they can keep the keys for it until the remainder of the transaction took place.
Why? How would one ever sell a Car while they still owe on the loan? For some, cash flow isn’t such that they can pay a Car completely off and get the title in hand from their finance company prior to selling.
Meeting the person at the bank, paying it off in-person and walking out with title in hand from the bank is definitely the safest way.
I can pay the seller for what he owes on the loan, take the car, and hold the remainder of the payment back until the title comes in and is delivered.
In order to use this form, however, the seller needs to provide me with exact payoff information and I still need him to sign over the title once it comes in (even if it gets mailed to me).
I am having him call his finance company tomorrow to have the title delivered to a local branch and we’ll make the transaction there.
The last thing you want is to pay it off in cash, get the title in your hand and realize that the guys 2nd ex-wife who moved to California 3 years ago is on the title also.
They are unaffiliated with the local banking branches and cannot send the title forward to a local branch so we can complete the transaction in person.
Buyer still owes on his loan, however, and does not have title in hand.
We’ll have to try to coordinate getting the financing company to send the title to a local branch.
The person we sold it to was a friend of DH’s family so they wrote us a check, we sent out the remainder of the loan to the bank and got the title 2 weeks later (took a total of 3 weeks).
I’m pretty sure that when I paid off my car loan it took a few days to get the paperwork from my bank, they mailed it to me along with the title & a note that it had been paid in full.
Many people ask us here on CarBuyingTips.com, "How do you buy a used car from someone who still owes money to the bank for the car loan, and how do you transfer the title to your name?" You just agreed to buy a used Honda Accord from a seller on eBay Motors or Craigslist for $6000, then you learn the seller still owes $3000 on the car loan.
Once the loan is paid off and the bank satisfied, about a week later they send the clear title to their customer free of liens, with "Lien Satisfied" stamped on the front of the title.
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I am wanting to buy a used car from a private seller, and they still have a loan on the vehicle.
You had better make arrangements with the seller to get the car paid off and get their bank to title the car in your name, not his.
Many drivers finance the purchase of their vehicles, but the associated lien on the car can create some hurdles if an owner decides to sell before the loan is paid off.
"Upside down," "under water" and "negative equity" are interchangeable terms for a bad situation: All three mean that the car owner owes more on the vehicle than it’s worth.
If you qualify for a lease special with a low monthly payment, such as the $199 or less deals that have been common in 2014, it can soften the blow of carrying along the negative equity.
For example, if a person was $1,500 upside down on the trade-in car and wanted to buy a new car that had a $2,500 rebate, he or she could erase the negative equity and still have $1,000 for a down payment on the new car.
The dealership was happy to take the Civic as a trade-in toward the larger Honda Accord, but it had some bad news: The owner was "upside down" in the Civic, owing $4,000 more than it was worth.
You will still deal with higher than normal monthly payments, but at the end of the lease (typically three years), you are no longer upside down.
In the first quarter of 2014, nearly 28 percent of car sales that had a trade-in were ones in which the owner still owed money on the vehicle, according to Edmunds.com data.
Nevertheless, even if the vehicle is encumbered by a lien holder other than the financing bank or finance company, the problem can be solved with the proceeds from your loan disbursement.
A car lien is placed on a vehicle when the registered owner of the vehicle still owes money to the bank or lender that financed the vehicle.
In the event that there is another person or company listed as the lien holder that did not provide financing for the original purchase of the vehicle, use extreme caution.
Once your check clears, the bank will release the lien on the vehicle, and you can start the process of transferring the title into your name.
A car lien simply means that a vehicle cannot be legally sold and owner title transferred without first paying the obligation to the lien holder.
If you buy a car that has a logbook loan on it and the person you bought the car from stops paying the money back, the finance company can repossess the car and keep it until the debt is paid in full.
The code of practice says the lender must register the logbook loan on a register, so it will show up when you carry out a history check on the car.
If a car is subject to a logbook loan, also called a bill of sale, the loan company is the legal owner of the car until the loan is paid off in full.
To sell your car with the loan still in place, ask your lender how the loan amount changes with each day that passes (the process is similar to using a mortgage payoff letter); they can calculate how much to add or subtract.
If the buyer trusts you, it may be as simple as selling the car with your loan untouched, paying off the loan with sale proceeds, and signing the title over after you get a clear title from your lender (which may take several weeks).
Call your lender and just ask what it takes to sell your car while the loan is in place.
Remember that you’ll get cash after you sell the car, so you may be able to replace whatever funds you use to pay off the loan.

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