Budgeting

How To Check For Liens On a Car 

Buying or selling a used car can be a stressful process, as it is, without other complications thrown into the mix. Which is why it is always a good idea to do your due diligence before buying or selling a car to make sure that it is in good condition and does not have any liens on it. 

Purchasing a used car from a private seller carries some risks, but if you know what to look for, most of them can be eliminated before you pass over the cash. We will give you an overview of what a lien on a car is, how to check a car for unresolved liens, and what else you ought to keep in mind when buying a used car.

What Is a Lien On a Car?

A lien is a legal document that gives a claim over the car on which the lien is placed to the person or institution who holds it. When there is a lien on a car, it means that the driver is not the sole owner and is still paying off a loan on the car to a lending institution. The lienholder on a motor vehicle has an interest in and legal right to the property and must be paid in full for the lien to be removed. 

Why Might Your Car Have a Lienholder?

There are a couple of reasons why there might be a lien placed on a car. The most common reason a car will have a lien is that it has a partially paid auto loan. If the car was purchased using an auto loan, the vehicle’s lienholder is the lending institution that granted the auto loan. A car bought with an auto loan will continue to have a lien until the balance is paid in full. 

There are a couple of other reasons that are less common than an auto loan lender that has not been paid in full that you should still look out for. Some state laws allow mechanics to place a lien on a vehicle when the owner doesn’t pay the money they owe for repairs by a specified date. The vehicle could have been used as collateral for an auto title loan. Auto title loans are secured loans for people with poor credit. Additionally, the government has the right to place a lien on a car if the owner has not paid back taxes on time. 

Whatever reason there might be for there to be a car lien on a vehicle, you must be sure that you do not purchase a used motor vehicle with a lien as you could be held responsible for paying it off, or the car could be at risk of being repossessed.

How To Check If There Are Liens On A Car

Luckily enough, it is relatively easy to check the lien status on a vehicle if you know where to look and what to look for. Here are a few of the actions you need to take before determining a car is fit to purchase from a private seller:

Check The Car Title 

The first thing you will want to do is check the car’s title to see if there are any current or past liens. It is essential that you always ask to see the title of a car and that you examine it carefully before purchasing the vehicle. All the lien information should be included on the title of the car, along with a record of ownership, both past and current.

Look At the Vehicle Documents

If the title shows a lien listed, then you will need to confirm that the lien has been paid off before you have the title transferred to you. You can do this by requesting the current owner provide you with lien release documents. A lien release document is a legal proof that the lienholder has the lien removed and the title is free and clear. Depending on your state, the lien release will sometimes show up under the lien status on the title. 

You will want to keep all this documentation if you do decide to purchase a vehicle with past liens on the title so you can prove that it was released before you became the new owner.

Use a Title Checker Tool

Some states have a title checker tool through the state DMV or state transportation agency. You can review and verify all the details provided on the documents by conducting a search using the Vehicle Identification Number (VIN), which can usually be found on the front windshield of the motor vehicle. Any lien information on a car should be included when you use a title checker tool. 

Get a Car Report

Using a car reporting service will give you most of the information you could ever need to know as a buyer. A car report service will typically charge you a small fee, but with a vehicle identification number, you can access lien information and an abundance of other details that will be good to know.

How To Resolve A Lien

If you find a lien that is unresolved on a car title, or you need to get rid of a lien so that you can sell your vehicle, you will need to resolve the lien before buying or selling the car. 

Contact the Lienholder and/or Original Vehicle Owner

If you are considering buying a car that you just discovered has a lien, you should call the seller immediately to request that they have the lien removed and provide proof with lien release documents before you proceed with the sale. You can still contact the seller if you have already taken ownership of the car to see if they can still resolve the lien.

Pay Off the Lien

When you are the owner of the car, you will need to pay off whatever is owed for the lien to be removed. Whether you were the owner of the vehicle when the lien was placed, or you have just completed the purchase of the car, you will be legally responsible for it. Once the car is bought, the seller will have no legal obligation to pay, which is why it is vital that you never buy a vehicle with a lien. Neither should you sell a vehicle with any liens because it would be ripping the buyer off.

Other Things To Remember When Purchasing a Used Car

Buying a used car from a private seller can be a risk, but, at the same time, it can present you with some fantastic deals. It’s all about being careful and going the extra mile to double-check that everything is kosher before you go through with anything.

Here are a couple of other things you should always keep in mind when purchasing a used car: 

Consider the Long-Term

When considering what type of car you should buy, it’s a good idea to think about the longevity of a vehicle. You might find the cheapest deal with a car with a whole lot of miles on it, but how long will it last? You want to make sure that the car will last a while to make your purchase worth it. You don’t want to be stuck with a car that you need to take to the mechanic every other month. 

Look Up the Vehicle History Report

Using the car’s VIN number, you can look up the vehicle history report. Review the vehicle history report closely before having a title transferred to you. This will not only protect you from purchasing a car with a lien on it, but it will also give you all the information you need to know about past accidents, owners, and significant repairs. The fees are worth it to avoid purchasing unreliable vehicles. 

Test Drive the Car

Always request to test drive a car before you spend money on it. You shouldn’t just rely on people’s words or even just the documentation. It’s important to get a feel for the car and listen closely to the engine sounds to ensure everything is running smoothly.

Get a Third-Party Inspection

Request a third-party inspection from your own personal mechanic. If the seller is hesitant to agree, this might be a sign they are not entirely trustworthy. A third-party inspection will guarantee reliability, which can’t always depend on when you are getting it done by the seller’s mechanic. Have your guy check everything out to make sure it’s fine before you pay for the car and transfer the title to your name or have a new title drawn up. 

References:
How To Check For Auto Liens – CarsDirect
How to Find Out if a Used Car Has a Lien | GetJerry.com