Finance a Used Car With A Lien
To finance a used car with a lien is not that difficult and is a pretty common occurrence now days. This is because most people have a lien on their car when they go to sell it. Gone are the days that someone pays off their car and keeps it until it dies.
Let’s begin by explaining what a lien is…
A lien is a put on a piece of property, in this case a vehicle as assurance that the borrower will pay the debt in full. It is a form of security for the lender.
When anyone finances a car, new or used the bank places a lien on the vehicle until it is paid in full. This gives the lender the right to the title also. Once it is paid in full the lender releases the lien and the borrower owns the car outright.
Now you will become the holder of the title.
Buying a used car from someone who owns the car outright and is the holder of the title is definitely an easier choice but there are times when it simply isn’t possible.
So, if you have fallen in love with a vehicle that you simply must have but it still has a lien on it, let’s take a look at how to finance a used car with a lien.
If you’re buying from a private seller…
Never hand over cash to the private seller that still has a lien on his or her vehicle they are trying to sell. This is because you have no guarantee that the person will pay off the loan releasing the lien.
If they don’t pay off the lien…
You are out double; you have lost your money and you cannot legally own the car.
Begin by speaking with the person who is selling the car. Discuss which lending institution holds the lien on the car. Ask how much he owes on the balance of his loan.
You will want to know this information.
If the seller owes more that what the vehicle is worth you will want to know how the seller is going to pay the balance off.
