How Can a Buyer Know if a Car Has a Lien on It?

by Debbie Dragon

    Buying a car that still has a lien on it can cause serious financial problems for the buyer. Not only will you directly pay for the car to the seller, but the lender that owns the lien can hold you responsible for the remaining balance on the loan. Before buying a car, avoid financial nightmares and potential problems with the DMV, ensure that it doesn’t have a lien on it.

    Car-Buying Homework

    Before you give the car seller a dime, ask to look at the vehicle title and registration. These documents should indicate that the lien has been paid in full. If any of the papers indicate there is a lien on the vehicle, ask for documentation that shows the lien has been paid off. When buying from a private seller, also verify that the name of the car owner matches the name on the seller’s ID.
    Write down the vehicle identification number -- VIN -- from the vehicle itself, located on the dashboard of the driver’s side of the car, and compare that number to the VIN listed on the title and registration paperwork. These numbers should match -- if not, don't buy the car.

    Researching the VIN for Liens

    Once you have the VIN in hand, you can dig a little deeper to verify that the vehicle doesn't have a lien on it. Go to the DMV and request a car history report. It can provide this report from the VIN; the report will detail all previous owners of that vehicle, any accidents the car has been involved in and whether anyone who has ever owned that vehicle still has a lien on the car.
    To avoid a trip to the DMV at this stage of the car-buying process, you can purchase a vehicle history report online with the VIN or try a variety of free VIN searches. Not only will these reports indicate whether or not there is a lien on the vehicle, you can also find out how the car was used in the past, how many owners it had, a record of car maintenance and any car accidents reported. Some of the more popular websites to conduct VIN research include Carfax.com, DMV.org and vehicleidentificationnumber.com.

    Buying a Car With a Lien on It

    If you determine the vehicle you want to buy has a lien, it doesn’t always mean you can’t buy the car. Most sellers intend to use the money you pay for the car to pay off their lien and then keep whatever is left over. If you'll be paying for the car with cash, you can work directly with the lien holder and make the payment directly to the loan company so you know it is paid in full. If you're paying more than the remaining balance of the lien, give the car seller the difference.
    If you're buying a car with a lien on it using a car loan, you need to give the lien details to your lender so it can pay the lien holder the balance due, with the remainder of the purchase price going to the seller. Once the car lien is paid in full, you or your car loan lender can receive the title and register the vehicle in your own name.

    Wait for Lien Confirmation

    If you're buying a car from a seller who says the lien has been paid in full but he doesn't have paperwork to support it – do not buy the car. Ask the seller to get documentation from the lien holder that it has been paid in full before you agree to buy the car.

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