How to Finance a Vehicle With a Lien on the Title

A lien on a vehicle is most often due to a previous car loan that is not yet paid in full. If you buy a car that already has a lien and you want to finance it yourself, you'll have to work with the seller to release the existing lien first. Until this happens, you're going to have a problem completing the transaction.

Instructions

1

Negotiate with the seller on the final selling price of the car. If the seller is unable to pay off the lien himself, which would be the normal course of action, you may have to negotiate to pay off the other lien and deduct that amount from your final sale price. Hold off on shaking hands and finalizing the agreement until you consult with your lender regarding the situation and the existing lien. If the lender agrees to assist you with closing this sometimes complex transaction, the lender would probably have to cut two checks --- one to the existing lien holder and another to the seller for the remainder of the sale amount.

2

Draw up a bill of sale that outlines the entire agreement including conditions and contingencies, once you have confirmation that the lender can help you with this transaction. Have a lawyer review the agreement and notarize it with your signature and the seller's.

3

Pay the other lien holder (the contact information is located on the title). Wait to receive a lien release from the existing lien holder as well as the title. See if you can arrange to have it sent to your address or directly to the new lender. The new bank will most likely handle this step.

4

Proceed with the sale at the lender's office, with the seller present. The lender issues final payment to the seller for the remainder of the sale amount per your bill of sale. The seller must sign the back of the title to you as the new owner, then the lender takes the title into possession as the new lien holder. The exact transfer process may vary by lender.