How to Add a Lien on the Car I'm Selling

Selling a car can be easier to do if you are willing to take payments instead of the whole amount up front. If you know the person buying your car, or you wish to sell the car quickly and don't necessarily need all of the money from the sale up front, this can be a win-win for both the buyer -- who may not have all of the money necessary for the car -- and the seller. In order to secure the loan, you can place a lien on the car so that if your buyer defaults, you can repossess it. Once the loan is paid off, you can release the lien.

Instructions

1

Write up a sales agreement. The agreement must include the amount of the monthly (or other period) payment as well as the interest rate, if any, and the balance due. Include any charges for late payments, as well as a right of repossession clause, and details stating under what conditions the car will be repossessed if payments are not made in a timely manner.

2

Sign the agreement in front of a notary public and have the document notarized. Both buyer and seller should be present and will need acceptable photo identification for this process. Acceptable forms of ID are usually a government issued ID, a state driver's license or ID card or a U.S. passport.

3

Go to your department of motor vehicles and ask to have a title issued in both the name of the buyer and the lien holder. As the seller you will need to fill out a form to apply for the lien. This form usually includes listing the amount of money the car is sold for.

4

Pay the lien-holder processing fee as required by your state.

5

Wait for the title in the mail. You will no longer be listed as the owner of the car. The buyer will be listed as the owner and you will be listed as the lien holder. The title, however, will not be transferred to anyone else until you release the lien.