How to Purchase a Car With Outstanding Financing

When a car for sale has outstanding financing, that means the current owner has not fully repaid the loan he took out to buy the car. The lender has a lien on the car title, meaning that the lender has the right to repossess the car if the owner does not repay the loan. Ensure the previous loan is paid off so you own the car free and clear.

Instructions

1

Agree on a purchase price with the seller. If the price is less than the amount the seller owes on the car loan, ask the seller if he has enough money to pay off the remainder of the loan. If he does not, he must arrange to borrow money to meet the difference.

2

Ask the seller for the name of the lender with which the car is financed. The lender's name should appear on the current title of the car.

3

Call the lender and ask how its lien release process works. In most cases, the lender will not remove its name from the car title until the loan has been fully paid. If needed, set up an appointment for you and the seller to go to the lender's office together.

4

Go with the buyer to one of the lender's branch offices. Give the lender the amount you and the seller agreed on as a purchase price and wait while the seller repays any additional outstanding financing on the car.

5

Complete the bill of sale and, if the lender has the title available, the title transfer documents. If the lender does not yet have the title available, submit the required paperwork, which the lender will then send to the department of motor vehicles to have a new title issued in your name.