If you are looking to purchase a used car from a private seller, you might run into a title lien. But what does that mean?

Purchasing a car with a loan attached, or a title lien, requires a little more work than without, but it can be done with a little help from our partners at KeySavvy.

What is a title lien?

A title lien means you owe money on your car in the form of a loan. Your buyer cannot purchase or register a car in their name without your loan paid off in full. The title lien is a form of protection for the lender, who has financial interest in a vehicle. In most cases, a loan is funded by a bank or credit union. The title lien is a way to assure the lender will be paid the remaining balance of a loan and is imprinted on the vehicle’s title. So before the title can be transferred, it must be paid off.

How do I know there is a title lien on a car I want to purchase?

It is important to make sure you know whether a car is paid off or not before you purchase to avoid any further legal trouble or surprises at the DMV when trying to register your new car.

Ask the seller to see the car’s title

If there is a lien, it will be clearly printed on the title. Be sure to take a look at the original title, and not a photocopy of the title. If the seller says there are no liens on the title, ask to see the title to confirm. If they refuse to show you the title, there could be a lien that is not being disclosed.

Check the vehicle’s VIN for any title liens

KeySavvy offers their services to check a vehicle's VIN, to verify the seller and buy with confidence. Write down the vehicle’s VIN, found in the dashboard near the windshield or on the driver’s side door jamb. It is also listed on the title or other registration documents.

How do I buy a car with a title lien?

Have the seller pay off the loan before purchase.

If they have the cash available to pay off the loan and you have the time to wait, this is an easy option. There are options to take out a personal loan to pay off a car, but it can reduce the seller’s credit score, which can make it difficult to get approved for the next vehicle. It is important to keep in mind that buyers should never go through with the sale until the lien is cleared from the title.

Have the buyer pay off the loan before purchase or assume the loan

If the seller cannot pay off the balance of the loan or get it refinanced, this is another option, although not a real feasible option. You would have to deduct the loan amount from whatever you are paying the seller for the car.

Have the seller use a third-party to sell to the private buyer

KeySavvy offers their services for sellers if they don’t want to pay off their loan first. Benefits of using KeySavvy to sell to a private buyer: * The seller doesn’t have to pay off their loan in advance. The loan balance is deducted from the seller’s payout. * The seller doesn't have to wait for their title or lien release to arrive from the bank. * You, as a buyer, can pick up the car as soon as the seller agrees to sell it. * KeySavvy handles the loan payoff and title transfer paperwork. * The seller can sell their vehicle on any marketplace they prefer.

Final tips on buying a car with a title lien

Before buying a car with a title lien, it is important to get familiar with your state’s laws and regulations on buying from a private party. A good place to start is at the DMV websites, which provide this information.

Always get a pre-inspection if you’re considering buying a car from a private seller to be sure the vehicle isn’t hiding any serious faults.

Remember to get a bill of sale from the seller, and all other lien-related documents that your state requires to make it easy to transfer the title and register the vehicle without other financial obligations.

Using a third-party, such as KeySavvy, can make your buying experience easy for you, as well as the seller. Consider this option when speaking with the seller about your purchase.

About KeySavvy

KeySavvy helps consumers buy and sell vehicles online by eliminating fraud in private party transactions. We believe the private market offers the best value to both buyers and sellers, but the risk of fraud and cumbersome sale process prevent consumers from fully realizing that value. KeySavvy protects buyers and sellers, allowing everyone equal access to the private market. Learn more at KeySavvy.com.