Buying a car that still has a lien, what to do?

[X 02]

I'm buying a car in Houston, TX but the current owner still owes money to Honda finance. I'm in California and I dont' know how to closed this deal with the seller and Honda Finance. What can I do or how should I pay the seller his share, pay off the bank and have the title send to me directly? Whatwill be the best way for the bank to release the title to me?

The seller will not be around town once he sells the car and I don't really want the seller to be involve in any of this after I paid him off.

Regards,
Sancho

 

[Autophile]

I think if you call the Honda finance company, they could explain what the normal procedure is.

Prime member tararan might appreciate knowing this as well, if he indeed decides to sell his X.

 

[LeftLane]

Sancho:

Or...you could just buy my 95 instead(I'm in Texas too). I have the title in my hands and no lien to worry about.

Actually, I sold a car last year that I had a lienholder on. I had the buyer send me a deposit, and then he wired money directly to the lienholder and I instructed them to send the title directly to him. There is more risk for the buyer this way, so I would make sure you get all your ducks in a row before making the commitment this way.

Good luck, and let me know if you want to change your purchase plans!

Todd

 

[X 02]

Todd, thanks for the info. However, I got word from Honda finance that they do not accept wire transfer. I can only overnight them a cashier's check to pay off the lien. The seller is telling me to do the same as you mentioned below. I have no problem paying his asking price minus what he owes the bank. But like you said, there is a risk. I just don't know how big of a risk is there and what I can do to prevent it if something was to happen. I will call Honda finance and consult this issue with them.

Sancho:

Or...you could just buy my 95 instead(I'm in Texas too). I have the title in my hands and no lien to worry about.

Actually, I sold a car last year that I had a lienholder on. I had the buyer send me a deposit, and then he wired money directly to the lienholder and I instructed them to send the title directly to him. There is more risk for the buyer this way, so I would make sure you get all your ducks in a row before making the commitment this way.

Good luck, and let me know if you want to change your purchase plans!

Todd

 

[len3.8]

Sancho, You could get a check for the leinholder, Take it with you to the buyer, get the buyer his portion, have the buyer give you a detailed receipt signing ownership of the car and title to you upon payoff. I think you could do this in the company of a notary.
Also I had a form that authorized me to sign the title when I received it from the leinholder, the seller had to sign this, be careful some states don't let the buyer sign the title. (Hint it needed to be signed before you registered it) After doing all of this the buyer and I copied the cashiers check and faxed it to the leinholder, Then we mailed the cashier's check and other paperwork along with the check to the leinholder. Then you drive away with the car. A bill of sale is a must. Receipt's for the check and copies of all you sent to the leinholder. Then call the leinholder the next day to make sure you are getting the title.
YMMV, but this worked for me.

 

[ChrisK]

Sometimes it could be easier to take out a loan through your bank even if you have cash in hand. Your bank then pays off the leinholder directly and aquires the title and pays the rest to the seller. You then can just pay off your loan and your bank will then give you the title once your loan is paid off. That is just one way, but it is a safe way.

 

[DocL]

I once sold a car that still had loan payoff on it and I did it through my attorney's escrow account. I did it this way because I wanted the buyer to be assured that I wasn't going to take off with the car after the loan was paid off with his money.

You are always taking a risk by paying off someone's loan because the bank will send them the title, not you the buyer. So, unless you trust the person is honest and you've meet him, I wouldn't just send a check to their finance company. Ask the seller if his attorney can escrow the funds, this way there's some recourse if the seller runs off with the car.

 

[NSX123]

I STRONGLY AGREE with ((DocL))

Just as he said... You would be taking a HUGE risk by paying off this guys loan... with or without his title he can take off or just disappear with his own car, and technically he is legally entitled to keep his car if his debt to the bank has been settled. And yes the bank will send him the title, not you the buyer.

Perhaps, you can have a lawyer notarize an Official Bill of Sale, stating the exact responsibilities of the seller and the buyer. Thus officially legally binding the seller, just incase he decides to cruz to Mexico...

 

[Zishan]

Todd, thanks for the info. However, I got word from Honda finance that they do not accept wire transfer. I can only overnight them a cashier's check to pay off the lien. The seller is telling me to do the same as you mentioned below. I have no problem paying his asking price minus what he owes the bank. But like you said, there is a risk. I just don't know how big of a risk is there and what I can do to prevent it if something was to happen. I will call Honda finance and consult this issue with them.

Sancho, I recommend paying Honda first and have someone's word, like a manager, that the title is on the way to you. Then when you pick up the car, give the seller the difference that you owe him in a cashiers check. Or you could do what I did and go with him to the bank. I dropped off a wire transfer agreement before heading out of town to buy my NSX. When we got to his bank, I called in the wire transfer and they did it within 30 minutes. Once he confirmed the money was there with the bank manager, he handed me the keys and title, I dropped him off and came home a happy camper!
Good Luck
Z

 

[jlindy]

I agree with Len, but I believe in addition to the Bill of sale, you have to have the power of attorney form signed so that the leinholder can send you the title directly instead of to the previous owner when paid off. That way, you don't have to worry about getting the title from the owner. Also, make sure the bill of sale is done by a notary and third party. That what a bank is there for. Finance companies do this all the time, so they should tell you what you need.

 

[DocL]

Why would the seller let the buyer get the title when the buyer only paid a portion of the sales price?

The best way to do this is through the bank or as I previously stated through an attorney's escrow account. Or, have the seller take out a short term loan to pay off his car and then he can sell it without any hassle.

 

[len3.8]

Why would the seller let the buyer get the title when the buyer only paid a portion of the sales price?

The best way to do this is through the bank or as I previously stated through an attorney's escrow account. Or, have the seller take out a short term loan to pay off his car and then he can sell it without any hassle.

Doc, The seller would get his cashiers check at the same time or at most a day before the leinholder gets his payoff. Having the bill of sale and notarized paperwork give you a final decree that the seller is releasing all of his ownership of the car to you, the buyer. With the correct paperwork,the leinholder will release the title to the buyer. Most of the time the title needs to be signed by the seller as well, That is why I would suggest that you get the seller(S) authorization for the title to be signed by the leinholder or if legal in your state, yourself. JAO
Make sure that all owners on the title are represented in all paperwork and signing.