I am trying to buy a used car from a person with that still has a car loan for it. For this example, say the buyout for the loan is $29k, but he agrees to sell the car for $25k.

Too tell you the truth, though, the person really did not tell me how much his buyout is. He mentioned that he has a loan for it, and he needs to leave the country for work reasons. I just don't want to be screwed by getting stuck with the bill from the bank.

How can I make sure that the bank doesn't come after me for the rest of the $4k? Isn't this the biggest danger in buying a used car from a person when the car is relatively new? (that is, there is usually a big loan that needs to be paid off).

Thanks for your help.

 

not such good advice

the loan is in his name, and his bank consquently will have a lien on the vehicle title until he pays off his loan.

so if you go ahead and give him the 25k, he can do anything he wants with the 25k - he can disappear (leave the country) and you will be left 25k poorer with a car that the bank owns because they have it as collateral on a loan that has not been paid off.

in other words you need a clean title with no liens on it and i don't recco giving 25k to a complete stranger nor following random *** advice in this forum on the matter of consumer finance law :-)

 

Make sure the title you get is clear or has a lien release letter from the bank, otherwise i wouldn't touch it.

 

If there is a loan on the car, his bank will have the title, not him. So he would be unable to give you a title until he resolved that situation.

If he can give you a real title, then you shouldn't have to worry about his bank.

 

Both of you get together & call the bank to get the buyout, some even give that info online. If the buyout is $29K You get $25k + HIS $4k fed ex to the bank and pay off the loan and get the title. Paying off the whole loan at the time of purchase is the only real way to cover yourself. Even if he signs something and screws over the bank they (bank) will repo the 8 and you will have to sue the other guy.

 

That's good advice. The bank owns the car jointly with the owner, so you need to have both of them agree to release the car to you. The owner must sign the title over to you (obviously), but the bank must also release their lien. You can help the owner to arrange this by going to his bank with him, or leave it up to him. Either way, you won't own the car unless you get a signed title, and a letter from the bank releasing the lien. With this letter, the bank can't reposess the car - without it they can.

By the way, in Wisconsin, the owner has the vehicle title, but it has a lien listed on it. Someone said that the bank holds the title, but I think this differs by state.

 

Ah, sounds like it. Here in FL I don't get any title until the car is owned by me. Until then, the bank owns it.

 

As others have pointed out, what happens with the actual physical title varies from state to state. Maryland gives you the title (with a clear indication there is a lein on it) where Virginia sends the title to the lein holder.

Another important semantic thing to note here. The lein holder does not "own the car." You are the owner, the bank has a "security interest" in the car. If, for example, you owe less than the car is worth, and default on the loan, the bank has to give you the difference between what you owe and what they sell it for.

Of course in order to transfer the title (sell the car) all owners and all lein holders have to release the title.

Best advice for the original poster is to pool their money with the original owner's money to make up the difference. Both of you go to the bank and get a cashier's check, and then both of you mail the check to the lein holder. That way you know nobody is getting screwed.

---A

 

Itamijin,

Contact me I may have a RX-8 you may be interested in w/ no loan. I own the car free and clear of any debt and I live in Hawaii.