How to Finance a Used Car With a Lien on the Title

Financing a used car from a dealership involves some paperwork, but what about financing a used car from a private dealer that has lien still on the title? Well, that involves a little more paperwork, but it's still possible. If you can pass your bank's credit check and obtain a loan, then the most difficult part involves getting the lien released on the used car.

Instructions

1

Obtain financing. As long as you pass the bank's credit check, you should have no problem getting financing for an auto loan for a private purchase. Banks don't necessarily care whether you're buying from a dealership or private dealer; their main concern is ensuring they're paid back.

2

Ask the seller to call the financial institution that holds the lien. If the car is paid for but the financial institution still holds the title, the owner can request a lien release. Most financial institutions release the loan immediately after the car is paid for, but other institutions require the buyer to contact the institution. If the seller owes money on the car, he can ask permission to transfer the title to you, but most states and financial institutions do not allow a title to be transferred if it has a lien on it.

3

Contact the seller and ask him if you can complete the transaction at the financial intuition that holds the lien. If the buyer still owes money on the car and the financial institution won't allow a title transfer, he can only release the lien by paying off the car loan. He can accomplish this by paying the loan off with his available funds. Alternatively, you two can meet at the institution, complete the sale and he can pay the loan off immediately afterward.

4

Sign the back of the title in the indicated "Buyer" location. The seller should sign in the "Seller" box. Some states require that both signatures be notarized. Make sure the seller fills out any applicable lien information, such as providing the name of the lien holder. Certain states also require the seller to fill out the "Odometer reading" box, provide documentation of an emissions inspection, The Department of Motor Vehicles website has a list of state-specific title transfer guidelines.

5

Visit the local DMV to obtain your state's application for certificate of title. Complete the application.

6

Visit your local tax collector's office or DMV office. Most states designate the transferring of titles and vehicle registration to the local tax collector, but some states may require you to visit the local DMV office instead. The DMV's title transfer guidelines list each state's requirements.

7

Pay the necessary fees. Fees can range from under $20 to over $100, depending on the state you live in. After you the pay the fees, you will receive the new title in your name in the mail.