How do I go about purchasing a vehicle from a private party where the owner has the title held with his lender?
Posted by Intelligent-Tip502@reddit | askcarguys | View on Reddit | 5 comments
Buying a car on autotrader.com from out of state. The title is with a company he owes the remainder of the balance on. He says I can pay it off then they will send it to him, he will send it to me. He recognizes this is precarious for me. What’s the best way to go about completing this transaction.
sales702@reddit
I'm doing the same now. My lender had seller sign off on an Authorization for Payoff and Request for Title along with a Bill of Sale. My lender has sent them a check for the payoff amount, with a request that Title be sent to my Lender. The "Authorization for Payoff and Request for Title" was signed by the seller. In simple terms, this is a request for the original Lender to release the lien and send title to my Lender. (This is a condition of the check being negotiated - if the original Lender has a policy not to send the title to the new lender, then they are not authorized to 'cash/negotiate' the check). (My current car, the lender sent title to the original owner. He signed it and mailed it to me (yes, this can be risky, but again, it is important that you do your due diligence and identify the seller and be comfortable with the transaction and communication).
Interestingly, my lender will then send me the Title and have me have the seller sign off on title so I can then register and title the car in my state.
I've done this before on several occasions. It is important you verify the identity of the seller and that you do your due diligence. For example, in my case my lender obtained a payoff letter from the lender which 1. Showed payoff amount for the vehicle and 2. Identified the seller with his contact information. The seller and I have maintained communication throughout - both by messages, e-mails, and calls between myself and my lender.
I also identified the seller's social media and identity.
SAEftw@reddit
You can’t. He has no title to transfer to you. He has to pay it off and get the title from the lienholder first. This could take months. Keep your money and walk away.
Gamer30168@reddit
You could make him provide you with a title surety bond but if it's out of state it is trickier
Tree_Weasel@reddit
So, if you’re financing the vehicle, you two agree on the amount, and then sign a sale document in the state you’re in (in Texas, for example it is a VTR Form 346). The banks will discuss loan payoff and then the title will be transferred to your bank to hold until you pay off the loan.
If you’re paying cash, it’s really depending on what state you’re in. I’d ask him for the contact info for his bank, confirm how they require loan payoff and get it IN WRITING when the title will be transferred to you.
mlhigg1973@reddit
Do no do this!! Especially with it being an out of state purchase.