Selling Car with Lien still on it.

April 14, 2005 2:20 PM

My wife and I are likely to be moving from the US to Australia in the next few months. I have a 2004 Audi that we would need to sell. I would like to sell the car to a private buyer, as opposed to a dealer, to make as much back as possible. How do people deal with having a lien on the title while trying to sell the car?

Right now the car is worth approx. $27,000 and the outstanding loan amount is close to $21,000. Our savings are tight enough that it would be difficult to buy out the loan ourselves, get the title clear, and then sell. Have any of you dealt with this situation before, and if so, what did you do? I can't imagine a buyer would pay me the $27K and wait while I paid off the loan, got the title sent to me, and then sent it to them. The loan is held by Chase Bank and there are no local branches in my area.

posted by qwip to travel & transportation (15 comments total)

Do you own a house right now? Can you cash out the car loan with a home equity loan?
posted by Mid at 2:35 PM on April 14, 2005

When I sold my car (with a lien; it was a year old and we suddenly decided to join the Peace Corps) it was no big deal at all. When we found a buyer I contacted my financer to get a pay-off amount (which was valid for 10 days). I then worked with the seller's bank to get them to send a check in the payoff amount to the financer (and give me a check for the difference). I signed the title over at the seller's bank.

Maybe this is an overly simple way of looking at things, but it was really incredibly easy. Am I missing something?
posted by handful of rain at 2:57 PM on April 14, 2005

Doesn't the lien mean that the bank, in essence, owns the car? I would think they would pay the bank the loan amount and you would get what's left over (if anything).

You should probably call the part of Chase Bank that handles your loan (where you mail your payments to) and ask them.
posted by jasper411 at 2:58 PM on April 14, 2005

I'm going through the same exact process right now and handful of rain is right, its pretty much a straightfoward thing. The buyer makes out a check to the bank for the pay-off amount and then makes out a check for the difference to you.

I'm not sure what to do about there not being a local branch in your area, that probably makes it all a bit more tricky.
posted by Boydrop at 3:31 PM on April 14, 2005

What does not seem straightforward is the fact that the buyer is giving me a check, and not getting the title until I can send a payment to the bank (not local) and get them to send me the title. If it is typical that people get the car and don't have a clear title, then that's it. From my perspective it seemed that if I buy a car - especially from a private party - I want the title when I hand over the check. But it looks as though it's not the big deal I have made it out to be.
posted by qwip at 3:39 PM on April 14, 2005

OK, maybe it's different from state to state, but in Wisconsin I get a title to the car that also has the lien-holder on it. When I sold my car, I took that title to the seller's bank and signed it over. When you do that, the buyer (or maybe bank in this case?) sends the signed-over title in to the Department of Transportation, which deals with the transfer and mails out a new title. I think there was also some communication between the seller's bank and my financer, but I didn't pay much attention =)

BTW, my financer was out of state, so everything was done remotely and over the phone. The buyer's bank was local, and we both went there to close the deal.
posted by handful of rain at 4:00 PM on April 14, 2005

I don't think that it works the same way in PA. I'll check my paperwork, but I don't remember getting any type of title document. It went straight to the bank when I bought the car.
posted by qwip at 4:05 PM on April 14, 2005

Ah...that would be the difference. We got something in the mail from the DOT after the car puchase (the dealership gave us temporary documents in the meantime). The top part is all the legal stuff about the car, VIN, etc. , and includes the lienholder. The bottom part (which is tear-off) is a form for signing the car over to someone else (fill in personal info, mileage etc). So I just filled in the bottom part at the seller's bank, and the bank cut the two checks, mailed one to my financer, and sent in the change of title info. I assume they gave a photocopy or some other proof of ownership to the seller to tide him over until the DOT mailed out a new title.

However, if the paperwork is different in PA I can see why this would be a bit more challenging for you.
posted by handful of rain at 4:17 PM on April 14, 2005

It really doesn't sound like you're dealing with anything different than anyone else who's selling a car with an outstanding loan, which is probably 50% or more of people, in PA or anywhere else.

Unless you've got some kind of weird condition on your car loan--and it doesn't sound like you do--then this is a very mundane transaction, and it happens 1,000x a day. The bank will need to be involved, but they'll make sure that all the paperwork is handled correctly.
posted by LairBob at 6:21 PM on April 14, 2005

in Wisconsin I get a title to the car that also has the lien-holder on it.

This confuses me. If you have a title, you no longer need a lienholder; if you have a lienholder, then you don't have a title. While you are paying for the car, at least in my state, you have only a title application, a document that lists your lienholder and the number of the title you will eventually get when you pay off the car. It looks pretty like a title, but it ain't one. As long as you are paying on it, the lienholder has the title, and officially owns the car.

Isn't that right? Just wanted to ask, because it seems as though people are meaning two different things by saying 'title'.
posted by Miko at 6:49 PM on April 14, 2005

Miko: I just pulled the document out of my files and it says "Wisconsin Certificate of Title for a Vehicle." I'm listed as the "lawful owner of the vehicle subject to any liens shown." Volkswagen Credit is listed as the "Secured Party."

Wisconsin does a lot of things contrary to the rest of the world...maybe this is another one of them!
posted by handful of rain at 7:02 PM on April 14, 2005

In Missouri you also get the actual title. It has a "lienholder" line with the bank on it, so it's probably pretty useless until the loan is paid off.
posted by zsazsa at 8:34 PM on April 14, 2005

What does not seem straightforward is the fact that the buyer is giving me a check, and not getting the title until I can send a payment to the bank (not local) and get them to send me the title.

Nobody should sign over a title to anything until the buyer's check clears.
posted by sic at 1:17 AM on April 15, 2005

Nobody should sign over a title to anything until the buyer's check clears.

This is exactly what I am thinking. Does anyone have any practical experience selling a car with a lien on it in a state that does not give out a title with a "lienholder" on it? I need practical advice, not hypotheticals and even though "50% or more of vehicles" may be sold this way, it doesn't seem like many have a good idea of how this can be handled seemlessly in PA.

Love to hear from someone who has actually worked through this transaction in a state like PA. Remember, the bank is not local, so I can't go with the buyer and settle the debt. There 'will' be a waiting period.

Oh, and to answer a previous question, I don't have access to a home equity loan.

I know this shouldn't be this difficult a problem, but I'd like to have a strategy that made this as easy as possible.
posted by qwip at 4:51 AM on April 15, 2005

Wow -- that's nutty. All the states I've lived in (6) don't give you a real title till you pay off the car. Thanks for clearing that up.
posted by Miko at 1:42 PM on April 15, 2005