vixapphire

Would you buy a car from a seller who still owes a bank on the vehicle? If the amount owed was far less than the car is worth, would that affect your decision? If the seller needed your payment in order to clear the bank lien and get the title (takes a few weeks from DMV), would that affect your willingness to do the deal? What could such a seller do to get around that detail: would a bill of sale have any value pursuant to issuance of the title post-payoff of the loan? Or would a contract signed by both parties that spells out the rights and responsibilities of the parties (particularly the seller's obligations to payoff the loan and effect expeditious transfer of title, etc.) work to address the "bank holds the title" issue at the point of sale?

Please let us have your thoughts on this.

LeaseCompare

It shouldn't matter as long as the seller is fine with the asking price, based on its market value. It's possible that the original buyer had put $$$$ down to reduce the amount financed.

You can use a service like www.Escrow.com to help with the payoff/title transfer especially for out of state deals.

nickv

It wouldn't deter me at all, but I would do the following to cover myself:

1) Have a contract stating the terms and conditions of the deal and the vehicle
2) Pay the bank directly instead of paying the individual selling the car
3) Do as much of this in person as possible and have your documents notarized

This doesn't have to be a difficult process, just ensure you are comfortable with the person you are buying from and the contract is clear. Good luck!

slk55lvr

1) Have a contract stating the terms and conditions of the deal and the vehicle
2) Pay the bank directly instead of paying the individual selling the car
3) Do as much of this in person as possible and have your documents notarized



Thats perfect advice, and if you follow all three you can expect to have no problems buying a car with a loan still due. Skimp on any of them, particularly #2, and you are in for some problems.

Taximan1

option #2 all the way... However if the seller owes MORE on the car than you are buying it for. Do a contract as well. With every detail, VIN,mileage,teg#,etc,etc,.

If he owes LESS than the payoff, just send the entire amount in, and the bank will mail him back the change.

NY C32

Good advice above. The only thing I would add is verify the pay off amount. Personally, I would send that amount to the bank but issue another check to the seller instead of waiting for the bank to issue a refund to the seller. The payoff quote is usually good for 10 or so days so you should be safe that way. That can take a month. MB Financial says to allow at least 21 days before its mailed.