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3 min read published 27 October 2022

The content is written by Holly D. Johnson Written by an award-winning author, writer and author Holly Johnson writes expert content on personal financial, credit card, loyalty and insurance subjects. As well as writing on behalf of Bankrate and, Johnson does ongoing work for clients which include CNN, Forbes Advisor, LendingTree, Time Magazine and other publications. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances with concise, well-studied information that breaks down complicated topics into manageable bites. The Bankrate promise

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If you have questions about money. Bankrate can help. Our experts have been helping you manage your finances for more than four decades. We are constantly striving to give consumers the professional advice and tools required to make it through life’s financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our content is honest and reliable. Our award-winning editors and journalists produce honest and reliable content that will help you make the right financial decisions. The content created by our editorial staff is honest, truthful, and not influenced by our advertisers. We’re open about the ways we’re capable of bringing high-quality content, competitive rates, and useful tools for you by explaining how we earn money. is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and services or through you clicking certain hyperlinks on our site. So, this compensation can influence the manner, place and when products appear within listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. Other factors, like our own website rules and whether or not a product is available in the area you reside in or is within your own personal credit score can also impact the way and place products are listed on this site. While we strive to provide the most diverse selection of products, Bankrate does not include information about each financial or credit item or service. If you’re considering purchasing an used vehicle from a private dealer check if the car still has a lien attached to it by the lender. This could make the purchase more difficult but not impossible. It is necessary to take some extra steps to make sure the lien is removed prior to the transfer of title to you. What is a car lien? A car lien identifies the auto loan lender as the principal owner in the title. It’s a contract that serves as a safeguard for the lender if a borrower defaults. The lienholder could make use of the lien as a basis to take over the vehicle which is why they are considered . When the auto loan is paid in full and the lienholder is released from being liable for the loan and the car is owned in full by the borrower. The impact of a lien on the purchase of your car If you buy a vehicle with a lien, ensure that the lien is removed before you finalize the payment. If you’re purchasing using cash, and you are paying in cash, you might be able to negotiate directly with the lien holder to pay the amount yourself. Begin by contacting the lienholder who is currently in charge to determine the total amount due to release the car along with other terms that might affect the sale. Negotiate directly with the buyer. They may prefer to sell the car for a profit, but If you know the payment amount, you may be able to negotiate an excellent deal and avoid paying more than the car is worth. If you’re buying the car with an loan The process of getting a loan from your own pocket to pay should also be relatively simple. It is possible to communicate the details of the acquisition with the lender to make it easier for paying the lienholder. The remainder — should there be anygoes towards the vendor. After the lien is paid in full, either you either or your lender will receive the title that will allow you to register the vehicle in your name. You or your lender will be listed as the new lienholder up to you . If the seller repays the loan prior to the purchase, the sale can proceed more easily in the event that the person selling the vehicle simply pays off their auto loan and obtains the title prior to the sale. This isn’t available to certain people such as those who owe tens of thousands of dollars for a newer car or those who owe more money than the car’s value. If, for example, the seller owes $20,000 on a car that sells privately at $17,000, they’ll still have be liable to the lender $20,000 to three times more than the proceeds from the sale. In these situations the seller could decide to the remainder of the auto loan into an unsecure loan such as one that is a personal loan for the purpose of get the auto loan discharged. Make the purchase official However you decide to handle the situation ensure that you draft the contract which outlines how the lien will be removed or transferred. While it’s not required in every state but it’s still recommended to prepare an invoice of sale that outlines the transaction. Be sure it’s dated and executed by both parties so that everyone has a record about the purchase. It is possible to use a third-party escrow service to manage the financial aspect of this transaction. Escrow services can help ensure that the money for the sale is transfered securely. Just be aware that escrow companies charge charges for their services- and set it up with the seller in order to ensure you are both using an authentic business. How to check whether the vehicle you’re purchasing has a lien ? Ask the seller – they should be transparent regarding the status of ownership. It is also possible to check the VIN or title, as well as the vehicle’s history report to ensure that the seller is honest. Look up the vehicle identification number (VIN) at your state’s DMV. If there is a lienholder on the title or registration, the DMV will be able inform you. A title search will also give you information on liens. This is a great start point for finding the information of lienholders. Get a vehicle history report as well. Autocheck and Carfax have been regarded as two reliable firms which provide lien history along with prior maintenance, damages and owners. The bottom line is that there are many instances where individuals purchase a used vehicle with the lien of a private party without encountering any issues or challenges. To ensure the process goes smoothly and avoid major issues, be aware of the steps to take to remove the lien. You should also research pricing, line up your own financing for your vehicle and have any agreements you sign with a private seller in writing. Learn more


Written by Author, Award-Winning Writer Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. As well as writing for Bankrate and, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and many more. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing concise, well-researched, and well-written details that cut otherwise complex subjects into bite-sized pieces.

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