Buying a car from someone who is financing it
 

When purchasing a car from someone who is financing it, what proof must they provide to show they have paid the remainder prior to transferring ownership?

Say for example someone is financing their Honda for 5 years, I choose to buy it while they still have a year left on the finance. They say they will pay off the remainder of the amount owing. Will they receive a letter or verification number from the dealership saying that the remainder amount has been paid off? And how would I verify that they have paid off the amount owing? If they choose to sell it to me, what proof must they provide that they have paid off the remainder of the finance?

in b4 go with your gut feeling

thanks in advance

I'm assuming they will use the money you pay them for the vehicle to pay the remainder of the finance. You should both go to the dealership the car is from or the bank where it is financed and have it paid off. That way you know there will be know lien on the vehicle.

They're saying that they are able to pay it off completely right now (won't be using our money to pay for the vehicle). I'm assuming he will pay off with savings etc. If he says that he has paid it off, who would I check with after the fact to verify that theres no lien on the vehicle? Bank? Dealership? I have the VIN of his vehicle, of course.

^ yeap. Go to bank it's financed through, or dealer if it's in house.

edit: you ninja posted me. Go in with them when they pay it off. Or do a lien search. here: http://www.icbc.com/registration-lic..._a_lien_search

I'm cloudy on what you do if they take a loan through the bank and then use the cash to pay for the car though. Because technically they're still paying it off, but it won't show up as a lien I don't think? And if they stop paying it can still be seized? Forget these details sorry.

You can go with the bank they finance with and ask for a proof/receipt from the teller that the loan has been paid off.

I ran into this issue when I was buying a bike this summer. The gentleman said there were no liens on the bike and that he owned it but turns out he was financing it. That doesn't mean he lied, he may have felt like he owned it but truth of the matter is, the bank does.

My solution was to go to the bank with him and have him pay off the remaining balance and get documentation that the bike was under his ownership. He was willing to do it but I decided not to go that route at the end of the day. Too much hassle and I didn't want to get suckered.

Be careful. I wouldn't buy it unless you went to the bank with him to close out the amount that is owed on the bike.

So if you bought a vehicle unknowingly with a lien on it from previous owner (suppose you didn't do your homework) they (bank) can repo it and sell it? Or are you then responsible for paying off the lien? Or do they just go after the PO?

Like everyone has said. The bank can provide paperwork proving there is no lien on the vehicle. I've been through this and its a simple process. Get the lien documentation from the bank and also do the ICBC lien search as well.

Last time I read up on lien, Liens are transferrable and will be your problem once you purchase the vehicle.

One the title is transferred, the previous owner has no legal obligation to pay off the remaining amount.

So get them to pay it off before you even consider a purchase
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Also, I think if you do a lien check from a accredited credit check place and it shows no liens, they cannot go after your vehicle even if it has a lien. Double check on that

happened to me when I bought my car.

I gave the buyer two options:

1) he call the bank and ask for a temp loan to settle the car loan by himself so I can have a free and clear car. I also requested that we verify this info by going to a branch of my choosing and confirming with the teller while he was present.

2) him and I go to the bank, I pay off the whatever the remainder is and him and I both get a receipt loan was paid and I wait a couple of days before doing a lien check.


He picked #1 and had loan paid off in full few days prior to me buying the car.

A lien release letter from the lender showing that they have no further financial interest in the vehicle should suffice. You can also do your own lien check through BC Online to see if there are any other lien holders. Sometimes people borrow money against their vehicle and it shows up as a secondary lien.

Get a receipt of full payment or letter from the place they financed from saying it is FULLY paid off...

Then Transfer vehicle ownership and have all the necessary papers ready and prepared at the place of financed and have everything you need done right there on the spot with witness

If you bought a car with a lien on it, you are not responsible to pay the loan, ie it will not in any way affect your credit, however, they are completely within their right to repossess it if the previous owner does not continue to make payments on it.

The safest way to buy something with a lien is that you make out two cheques/bank drafts - one made out to the finance company for the exact balance outstanding on the day you buy it (have the seller call in and get the exact amount for you), and one made out to the seller for the rest. The bank/finance company will not write a lien release on the spot usually, but will give you a receipt for the payment, and will follow up with a letter confirming they no longer have an interest in the vehicle if you ask them for it.

Mark

^ exactly what I was going to say. I've done it before like that and it worked just fine.