The men in our lives are split between "do it" and "dont't do it"... what would MeFi do?

September 29, 2012 4:33 PM

My friend found a used car she wants to buy. Could you tell us whether this is a scam?

My friend is shopping for a used car, and she found one that she really wants. It's a recent model--let's say an Acura--with low mileage, and the guy selling it seems like a great person and straight-up in every way: he has a highly visible position at a big company and has communicated through his work email, he's on Twitter and Facebook, and my friend has met him and his wife (and really hit it off with them) and she and her brother have been to their house to test-drive the car, etc.

He's selling the car for the exact amount he owes on it--I think originally he wanted more, but they've been negotiating. This is where it gets weird (or maybe not): he wants her to mail a cashier's check to Acura Motor Finance in Texas, with a note on the memo line that she is paying off auto loan #[xxxx] for [seller's name]. Within two days, the DMV will supposedly be notified of the title change, and then my friend can register the car under her name. The guy says he will give my friend a bill of sale with her as the new owner, remove the plates and leave the car at her house in the meantime.

My friend's brother called Acura and they said something like, "9 times out of 10, the title is actually transferred." (9 times out of 10???) When I ran it by my boyfriend who's really into cars, he said that his father, a former cop, once told him NEVER to buy a used car that is connected to Texas in any way, because Texas is known as the best state for running car scams. (Note: my friend and the car are NOT in Texas.)

So, what do you think--should she go for it? Have you ever bought a used car like this? Could it be a scam? Is there anything she can do to find out whether it is? I think the seller has since offered to use escrow, but I don't know the details or how that would work--would that even be possible in this situation, and would it cover my friend's ass? She really wants this car, it's a great deal, and she instinctively trusts the guy, but obviously with $25,000 at stake, she wants to be absolutely certain that she's not getting scammed.

posted by désoeuvrée to work & money (23 answers total)

Call Acura Motor Finance and ask them if this is how they want to handle the transaction.
posted by iamabot at 4:37 PM on September 29, 2012 [5 favorites]

Not for $25,000.

There's another car out there.

Has she had the car inspected? Run a Carfax on it?

One thing she might do is to have a dealer broker the deal. They can hold the car on the lot, pay off the note, and then she can buy it from them. It might cost a bit more, but it's better than a $25,000 gamble.

Con artists make their livings making people feel comfortable about them.
posted by Ruthless Bunny at 4:40 PM on September 29, 2012 [1 favorite]

The last time I bought a car in this situation (the seller still owed on it), I got a loan from the bank for the amount. The bank handled the title transfer/payoff of the vehicle with the previous lender.

This was several years ago, but it might be an option for you.
posted by chrisfromthelc at 4:47 PM on September 29, 2012 [2 favorites]

She should talk to the DMV in her state. This is a really standard problem (how to transfer a title when there's an outstanding lien that will be satisfied by the purchase price), but I don't know if the procedure is the same state to state.

The DMV should have a standard answer on how to do this safely, without risk and without need to trust a stranger.
posted by grudgebgon at 4:47 PM on September 29, 2012 [5 favorites]

US News & World Reports, "Buying a car from a Private Seller":

"Do not physically hand over the check until you have the modified title in hand."

Your friend would essentially be paying off the owner's loan without getting anything immediately in return. Even if she is given possession of the car, without any paperwork, the seller could easily report it stolen. Do NOT complete the transaction in this manner. There are a million ways it could go wrong and only one iffy way it can go right.
posted by Ardea alba at 4:52 PM on September 29, 2012 [10 favorites]

Yay for knowing people. Now treat every transaction like a business deal. Just taking someone's word on it is too shady for a business deal. This is how people end up on Judge Judy.
posted by Marie Mon Dieu at 4:54 PM on September 29, 2012 [1 favorite]

There's a very simple way to handle this while protecting everyone's interests: Bank Draft.

The buyer should call their bank and ask if they will issue a draft to the seller and lienholder on her behalf. The draft is essentially a promise by her bank that they have the funds on hand and will pay them to the appropriate parties once they (the bank) have the title in their possession.
posted by buggzzee23 at 5:10 PM on September 29, 2012 [2 favorites]

This is a common situation (the lien, not Texas) and the *only* way to complete it with you, your money, the seller, his title, and an official third party like the finance company agent or a banker, all sitting down in person and making the transfer all at once. It's like selling a house. It's normal but there are rules and procedures to make sure neither party walks off with both the money and the goods.

If you can't go to Texas with the seller to do this, he needs to find a way to get the title here. Hopefully Acura Finance has local offices or works with local companies. Your getting a temporary loan also works as your bank will work out the lien with the other company. There might also be services that will do this for a one-time fee but I don't know what they are.

If there's no agent willing to deal locally and you don't live close to Texas, you're not going to be able to buy the car. It's the seller's fault for putting himself in a situation where he has no local agent of his lien-holder with which to work.
posted by michaelh at 5:12 PM on September 29, 2012

I believe that the dilemma you describe is a not super uncommon and, if you like the car and the price is good then it is probably worth the hassle to do provided other aspects of the car check out. Double check the VIN with both CARFAX and AutoCheck as it has been my experience that one will sometimes catch things the other missed.

If they are good then you need to have a buyer's inspection at a mechanic versed in Honda/Acura—who possesses the proper diagnostics equipment for the car (rare outside of Acura/Honda dealers) or go to the Acura dealer itself.

Dealer finance departments can broker the transaction for a fee as they have systems in place for handling payoffs. Alternately, you may want to try or at least inquire with the likes of CarQ a car buyer's broker. Another long-time and very well known buyer's agent is Ashley Knapp, the Auto Advisor.

AFAIK, both Fla and TX are the easiest states in which to "wash" a title for a car. This is done primarily to get a clean title following an insurance total loss, such as an accident or flood damage (post-Katrina flood damaged cars were flowing out of both states with clean titles). Going just upon what you said
posted by bz at 5:27 PM on September 29, 2012 [1 favorite]

Yeah this reeks of bullshit to me. Assume you're someone who can afford a nice enough car that it's worth any significant amount more than 25K as a low mileage used car, but because he can't afford to pay it off he's selling it at the title cost? Because he like someone he just met from another state and wants to do her a favor?

Get back on the turnip truck. As others have said, whatever premium would be involved in buying the same car cleanly and locally is cheap insurance against winding up losing the full amount and having no car to show for it. Think of it as an extended warranty.

The motivations don't ring true. If it's more than a couple thousand difference, the only way someone who can't afford to pay off his car upfront would take that kind of hit legitimately would be if his back was against the wall financially or he was selling to a close relative. Not a stranger. No way. Something is just plain wrong with the situation.

25K buys you a pretty quick little brand new car anyway (I'd take a Mazda 3 over any Acura anyway). Like the kind with a 5 year warranty, which is what people who don't know much about cars probably should be spending their margin of luxury money on anyway.
posted by spitbull at 5:38 PM on September 29, 2012

I'm guessing the seller doen't want to contend with reporting the $25K as income.
posted by bz at 5:49 PM on September 29, 2012 [1 favorite]

She really can't get another used car she likes for $25,000? She could get a brand new one for that without all this hassle.

The only way this would fly with me is if we were all sitting down with some third party like a bank willing to hold the money until title transfer or someone officially from Acura Finance (and I'd be really sure that's who they are...)
posted by asciident at 6:55 PM on September 29, 2012

Oh hells NO: no, do NOT pay off the seller's loan and then just trust him to hand over the title at a later date! Call your state's DMV and ask how they recommend handling it, because this sounds very wrong, VERY scammy. His loan and loan company aren't any business of yours, and you should NOT be writing checks to his loan company to pay off his loan!

Oh, and bz suggests the guy just doesn't want to report the money as income: this too is NOT YOUR PROBLEM.
posted by easily confused at 7:20 PM on September 29, 2012

This might depend on what state the car is registered in. If it's in a title holding state, the owner has a copy of the title in hand and can transfer ownership that way. You'd still need to clear the lien but you'd have more clear ownership of the car. So, if the car is registered in a title holding state and the current owner doesn't have the title, it's a scam.

2nd'ing talking to the DMV and/or Acura Financial and see what they say.

FWIW, some quick searching shows me that Honda Financial Services (Honda owns Acura and Acura Financial Services) has an office in Irving, TX (Click the little map on the side) so I don't think the fact that you'd be dealing with something in Texas is, in and of itself, an indication that this is a scam.
posted by VTX at 7:39 PM on September 29, 2012

Just to clarify, my friend and the seller (and his car) are in the same town on the east coast. It's just that the car loan is out of Texas, for some reason. I had assumed that's just where Acura Motor Finance is based out of, but I guess that's something else for her to look into--where the car is currently registered, where it was purchased, and why exactly the check is going to Texas. (It's not actually an Acura btw, but she wanted me to change some details for privacy.) Anyway, I really appreciate all the answers so far! You all don't even know how helpful this is!
posted by désoeuvrée at 7:44 PM on September 29, 2012

This is when I would use an escrow company. Think of it as a couple hundred bucks worth of insurance. If it doesn't work out, your friend is only out the escrow fee. And if it does, it should still be a great deal as it'd be a tiny percentage of the full price of the car. If it is a scam, the seller would likely balk at the mention of an escrow anyway.
posted by ethidda at 8:43 PM on September 29, 2012 [1 favorite]

I don't care WHERE Acura Motor Finance is based, that is NOT where the car would be/should be registered: the car is supposed to be registered *in the state the owner lives in*.... i.e., if the seller lives in Maryland, his car should be registered there too, no matter WHERE the finance company is located.

Your friend seems to be worrying about a lot of stuff that isn't her concern: ALL she needs to know about is legally getting the title at the same time she pays the seller. How much the seller owes on the car, where it was purchased, what his loan number is, where the loan company is, all of this is the SELLER's business. It is the SELLER who needs to communicate with his loan company, not your friend.

Contact your state's DMV --- the state where the seller resides, and therefore where the car SHOULD be registered! --- to see how to transfer this title.
posted by easily confused at 2:43 AM on September 30, 2012

I'm guessing the seller doen't want to contend with reporting the $25K as income.

This has nothing to do with anything. It's not income unless he's selling the car for more than he paid for it, which he's not unless the car's whole story is a lie, and even if he was somehow making a profit only the difference between the buying and selling prices would be income.
posted by jon1270 at 3:36 AM on September 30, 2012

The vast majority of people selling a recent model, low mileage car will trade it in for something newer, so most nearly new cars appear in dealer showrooms. This makes me suspect that the seller has money problems, e.g. if his bank account is 50K in the red then he won't be able to clear enough credit to pay off the car loan.

I would run away from this deal, there are too many ways for it to go wrong.
posted by Lanark at 4:07 AM on September 30, 2012

Also, the OP has not said that the car is registered to somewhere away from where the seller lives; she's only implied that she doesn't currently know.

I'd be asking myself whether I'd maybe fallen in love with a nice car and convinced myself this was a great deal when it really isn't. As spitbull commented, the 'great deal' notion suggests the agreed price is below the car's real value, which should be spurring you to ask why he would accept that. Is the seller moving out of the country next week? Is the car about to be repossessed any day now? Has it been repaired after a severe accident? Things that seem too good to be true...

If by some miracle the car's real value is fairly close to the selling price and I could see that it's a rational, legitimate transaction for both buyer and seller, then I would proceed with purchase but reject the seller's logistical plan. To the seller I'd say something collaborative like, "I'm fine with this price, but I'm not comfortable with the idea of stretching the transaction out over time. Let's make some calls and figure out how we can make this happen all at once, nice and clean, so nobody has to worry." If the seller balked at that, then I'd run.
posted by jon1270 at 4:08 AM on September 30, 2012

he wants her to mail a cashier's check to Acura Motor Finance in Texas, with a note on the memo line that she is paying off auto loan #[xxxx] for [seller's name]. Within two days, the DMV will supposedly be notified of the title change, and then my friend can register the car under her name.

I'd be real surprised that 1) Anyone at the finance company looks at the memo line on a check (those are generally notes to remind the check writer what the check was for), and 2) Anything written on the memo line would be acted upon by the finance company.

The way a title transfer usually happens is that the owner of the car (not the lien holder) signs the back of the actual title, transferring ownership to a stated buyer.
posted by Thorzdad at 7:36 AM on September 30, 2012 [1 favorite]

My guess is that this is legitimate, but sloppy. Scammers sophisticated enough to do everything mentioned above don't work for these kind of small potatoes.

Still -- I do like the advice above, though: your friendly local Acura dealer should be happy to broker it for a hundred bucks, as long as you all come in on a Tuesday or something when the lot's not busy. They like the money, and they like to establish a service and (hopefully) sales relationship with the new buyer. The dealer has a live line to Acura Finance, and can get everything done on line, with maybe a day's preparation, as long as you can come in with a verifiable bank check and proof of insurance covering the car you're buying.
posted by MattD at 8:00 AM on September 30, 2012 [1 favorite]

before doing anything else, have her run a carfax report on the car. that will show the title history - it should fit 100% with his story. anything else, run for the hills.

we came very close to buying a car from a curbstoner (someone who buys and sells cars without being a licensed dealer.) We thought we were dealing with an individual selling his (ooops, his "wife"s) recent new car. Turned out he had bought at auction in So Cal. He had the title but it was the one issued to the previous owner. We were willing to consider buying it but not sure the title transfer would hold up. He finally agreed to meet us at the DMV to complete the deal and then stood us up.

The fact that this guy is a highly visible person at a known company and uses the company email. (And I assume actually looks like the guy on his facebook page) makes it less likely that this is a scam - but not a guaranty. The question is what is the risk? Carfax will let you know if it is a salvaged title or similar hankpanky. Working with a third party will make sure that the transfer is legit. Is this a good enough deal that she is willing to take the risk?
posted by metahawk at 11:17 PM on December 6, 2012