Paying Off A Car Lien? Use An Auto Loan

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November 9, 2016

If you are attempting to purchase a vehicle that has a car lien, then the lien will need to be paid off before you can transfer title of the vehicle. A car lien is placed on a vehicle when the registered owner of the vehicle still owes money to the bank or lender that financed the vehicle. Liens are usually registered with your states' motor vehicle department or agency shortly after you take delivery of the vehicle. A car lien simply means that a vehicle cannot be legally sold and owner title transferred without first paying the obligation to the lien holder. In most cases a bank or finance company.

Car Liens: A Definition >>

Where Car Liens Come From

You normally run into car lien issues when you are trying to buy a vehicle from an individual and not a car dealership. Issues concerning car liens arise simply because the seller of the vehicle has not yet made all the payments on their vehicle. But, this is not a problem that can't be easily fixed, and it shouldn't cause you too much grief.

How to Clear a Lien on a Car Loan Fast and Easy >>

If you're paying cash for a vehicle, then you simply find out how much the seller still owes on the vehicle and send the bank or lender a check for that amount. You then pay the seller the difference, if any, between the negotiated selling price and the amount that you sent to the bank or lender. That's it. Once your check clears, the bank will release the lien on the vehicle, and you can start the process of transferring the title into your name.

If It Has a Lien, Get a Loan

If you're applying for a loan to purchase a vehicle that has a lien, the process is even easier. You simply inform your bank or finance company of the lien, and they will take care of the rest. Just as it would occur if you were paying cash, the lien holder will receive payment in full and release the lien on the vehicle. However, there will be a new lien on the vehicle. The one placed on it by the bank or lender that finances your purchase of the vehicle. Your bank or finance company will simply become the new lien holder.

Beware of Strange Liens

In the event that there is another person or company listed as the lien holder that did not provide financing for the original purchase of the vehicle, use extreme caution. If you discover a lien holder, other than the bank or lender, then you should make sure you ask the seller about all details pertaining to the lien.

Nevertheless, even if the vehicle is encumbered by a lien holder other than the financing bank or finance company, the problem can be solved with the proceeds from your loan disbursement. You simply need to inform the bank that is providing your car loan with the necessary lien information when applying for the loan. Then, as with a bank lien holder, the bank providing your loan will submit payment to the lien holder and arrange for the title to be transferred into their name.

Car loans can generally satisfy most lien obligations - as long as the lien amount is less than the sales price of the car. If the amount of the lien placed on the vehicle is more than the selling price, you should find another vehicle to purchase.


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