What Happens if I Buy a Car With a Lien?
You've probably dealt with car liens if you've ever borrowed money to buy a car. It is like an insurance policy that your lender keeps, ensuring that you pay off the auto loan. Usually, the lien would give the creditor certain rights to the car. And they can use this to repossess the car if you fail to pay. Other times, if you are not keen, you might buy a car and discover later that it had a lien on it.
Regardless of how your car got the lien, it's not an ideal situation. It means you don't own 100% percent of the car. And this can make it incredibly hard to sell or trade-off.
If you are stuck in this fix and wonder how a car lien is removed, this article is for you. We shall go over all there is to know about and how DoNotPay can help remove the car lien from your title.
What Is a Lien?
A lien can be understood as a claim or legal right issued to assets withheld as collateral and later used to settle debts. If a borrower fails to meet the agreed-upon payment terms, the lender has the right to take over the asset to be their own. They can even resell the asset to regain back their money. So what happens when you have a ?
It would mean that you are at the mercy of your lenders. They can claim your car for themselves and use its value to offset some of your loans. If you want to retain full ownership of your vehicle, you have no option but to have the lien removed.
How to Check if the Car Has a Lien
If you are looking at buying a car, it is prudent to check if it has a lien. Here’s what you can do:
- Ask the seller directly. Ask the one selling the car if the vehicle has a lien on it or if they are still paying off its loan.
- Check with the Online VIN Tool in your state. Even if the seller doesn’t tell you the vehicle’s status, you can check if it has a lien attached to it through the DMV.
You can use the following links to get in touch with your local DMV and access their online VIN checker tool. You can also contact them directly to inquire.
|New York||North Carolina||Montana|
If you use the VIN checker tool, ask for the vehicle’s VIN from the seller. The VIN can also be found in various locations on the car:
- By the driver-side doorpost.
- Inside the driver-side door.
- In front of the steering wheel.
- On the rear wheel well.
How to Buy a Car With a Lien
You may be doubtful or even scared when you learn that a vehicle you want to buy has a lien attached to it. Don’t worry. It’s pretty common that a private seller is still paying off his car but wants to sell it. You can still buy a vehicle with a lien, and here’s what you need to do:
- Make sure you communicate with everyone involved.
Talk to the seller, the seller’s lender, and your lender so that you can find the best option for everyone concerned.
- Ask the seller to pay off the loan.
This is the simplest way to make the transaction smooth. If the seller has some cash or can take out a personal loan to pay off the vehicle loan, they can do so to free up the title and remove the lien.
Consider, though, that not everyone can do that. They may be selling their car in the first place because they don’t have cash or can't afford other financing options. Still, it would be good to bring up the option anyway.
- Request the state to clear the lien from the title.
Even after the lienholder signs the lien over to you, you'll still need to get the lienholder's name from the title. For this, you'll need to ask your state's DMV to settle it.
- Talk to your lender to transfer the title.
Work with your lender on their policies in buying a car with a lien. Your lender may be able to complete the transaction with the seller and the seller’s lender. For example, if the sales price is higher than the loan, your lender can pay off the seller’s lender so that the lien will be removed, and the remaining funds will be given to the seller. You can have your vehicle lien-free.
- Use escrow.
If the lenders don’t want to work together and the seller cannot fully pay the loan, you can’t complete a transaction. Since you won’t be able to get the title, you shouldn’t hand your money over.
If you want to push through with the transaction, you can solve this problem by enlisting a trusted escrow service to handle the financial side of your transaction. Make sure you make local, in-person purchases so you won’t be involved in auto sales scams. The escrow service will ensure that your money is secure until the transaction is completed.
How to Make the Purchase Official
If you decide to buy a used car, you are most likely purchasing a vehicle with a lien on it. However you want to deal with the transaction, make sure you have a contract prepared about how the lien will be transferred or removed.
In some states, it is required that you create a bill of sale that details the transaction. Both parties should sign and date the bill and keep it as a record of the sale.
What Happens if I Buy a Car With a Lien?
Remember that the lienholder owns legal rights to the vehicle. If the seller did not tell you on purpose, and you find out only after the purchase that the car has a lien attached, you don’t have any legal right against the lien holder’s claim.
If you have been duped, you can file charges against the seller. However, there is a low chance of buying a car with a lien without knowing it, as you won’t be able to buy the vehicle until a lien is removed–the seller can’t give you the title in the first place. As with any transaction, it pays to exercise due diligence.
Again, if you are aware of the lien, you can consider the loan amount so that the lien holder will get paid, the lien is released, and you can have the clean title.
How to Remove a Lien With the Help of DoNotPay
As you've seen, removing a lien is vital if you want to own the car. But while the process seems straightforward, it can get complicated, especially since each situation is different. You might need to go to court, while a simple negotiation should settle it for others.
If you don't want to deal with the headache, you can leave it all to DoNotPay. Our app is fast and successful, and using it is as simple as following the steps below:
- Search for remove my lien on DoNotPay.
- Start our Remove My Lien product.
- Answer some questions about your specific lien, and let us help you craft a letter to your creditor to resolve the issue.
What Else Can DoNotPay Help You With
Removing car liens is only one of the many things DoNotPay can lend a hand with. We can also help provide solutions to other lien-related questions you may have, such as:
- Find out if there is a lien on your house.
- How to remove lien on a property.
- How to remove a state tax lien from public records.
- Tax liens on credit reports.
- How to find out if there's a lien against you.
It’s Not Just About Liens! DoNotPay Can Help With a Whole Lot More
But that is not all; our DoNotPay app can do much more! Additionally, we can help with all matters concerning formal or informal applications, not limited to:
- Getting reduced property taxes.
- Filing claims in small claims court.
- Cleaning up your credit report.
- Getting help paying off bills.
- Closing unused accounts.
- Reaching customer service quickly.
So, what are you waiting for? Ready to finally get rid of that nagging lien on your car? Sign up with us today at DoNotPay and let us take care of it.