Buying a used car with loan on title, expired registration. (car insurance, vehicle)

[pplaza3216]

Hi all,

This is a tri-state mess ! I'm a current PA resident who wants to buy a used car from the current owner in NY and then move to MD.

The car:

1) It was last registered in Kansas to the current owner - and then he got to NY state and never registered. I think the current owner said that it has been a year since the registration has expired.

2) It has some outstanding loan or lien on its title currently. The owner said that when I buy the vehicle from him, he will use the money to pay the loan off.

This is my first time buying a car - and this stuff sounds pretty complicated to me. I'd really appreciate any help about how I should go about buying this car and getting it registered. Which state should I get it registered in ? Is it ok if the owner pays of the loan after he hands the title over to me?

Thanks a ton !!

[Sgoldie]

Was the car registered in Kansas to the same guy you want to buy it from in NY? Because that (Kansas registrant) is whose name should be on the title. The registration, whether it was or wasn't done currently, is not as important as is the name on the title. You will need a bill of sale from the person whose name is on the title.

You will need to have a legal lien release form from the lender to present before you register it in order for the lien not to be transferred automatically when you register it.

Suggest you call your local DMV office before doing the deal to make sure you don't get into any snafus.

[pplaza3216]

Thanks for the reply. Yes, it was registered to him. I have made the correction in my original post

[sunsprit]

It's all pretty simple when you break the purchase process down into the two issues:

1) get a clear title to your purchase

2) register your purchase in your name

Since this is a private party transaction, you want to be very sure that the lien on the car is going to be paid off and released. If you are simply going to give good funds to the seller and depend upon them to pay off the lien and get it released, I'd be a little concerned. I think a better way to do this would be to get a letter from the lienholder to the seller showing the full payoff amount on a given date, and then you issue TWO checks: the first, a bank cashier's check made out directly to the lien holder for the exact payoff amount, and a second, to the seller for the balance of the money you owe them. I wouldn't give the seller the second check until they can show a lien release letter and UCC filing release from the state where the lien was filed.

You'll want a bill of sale from the seller for the full purchase amount, showing that they received the funds in full and releasing all right, interest, and title to the car.

You then head to your new DMV with your bill of sale, the signed over title to you, the lien release paperwork, and fill out a new title application form. Depending upon how your new state handles this, the DMV will issue a temporary license plate to you and file the paperwork with the application with the state of the last title. If all shows up clean, then you'll get your new title in due course, which could take several weeks.

If you're really trusting of the seller, then you could just give them all the money and depend upon them to pay off the lien. I'm not that trusting in these deals with private parties, so I wouldn't do that. Way too many opportunities for the seller to "forget" to send the payment off for the right amount and the lien doesn't get released. It gets way complicated at that point between you and the seller and the lienholder to get your clear title.

Of course, there are little details about legally moving the car from the seller's property to your place. Without a current license plate or insurance, it's a problem that could "blow up" in your hands. There's risks (and possible bad consequences) involved with driving it without the proper paperwork and insurance, so you need to consider that when you're trying to complete your purchase. Best to leave the vehicle at the seller's place or tow it to your place until all the paperwork and registration is worked out correctly.

These are all details which a car purchase at a dealership are worked out for you, and a reputable dealership will use the money properly to pay off liens, get proper paperwork filed and a title application in your name, and be able to issue the temporary license, and to assist with insurance if you don't have your own insurance agent (although the dealership is a pricey place to get car insurance, so I don't advise you to do that).

My point here is that you're either going to get experience real fast in the purchase of your first car from a private party or you can make the car buying process a lot easier by going to a dealership. If the price on the car you are looking at is a really great deal, then it may be worth all the process you are going to go through. But if it's not any great deal, then maybe you'd be better off doing business with a dealership.

[Stratford, Ct. Resident]

If the private owner can't hand you the title along with the keys, then forget it. Just keep on walking. Life's too short to deal with morons with stories and you usually end up getting burned when you deal with people like that. Run..............

[Bydand]

My biggest question would be why haven't they registered it for a year. Sounds like trouble. Usually if you have a loan on a vehicle and still paying it, you want to actually drive it... unless something is bad wrong with it, then you want to sell it cheap and fast to the first sucker that comes along and will buy a story.

Personally I would walk away and find something less complicated.

[Egobop]

Originally Posted by Bydand

My biggest question would be why haven't they registered it for a year. Sounds like trouble. Usually if you have a loan on a vehicle and still paying it, you want to actually drive it... unless something is bad wrong with it, then you want to sell it cheap and fast to the first sucker that comes along and will buy a story.

Personally I would walk away and find something less complicated.

I agree with this 100%. I would personally stay away from it. If you are thinking about it because it sounds like a really good price I would stay away from it even more.

[pplaza3216]

Originally Posted by Egobop

I agree with this 100%. I would personally stay away from it. If you are thinking about it because it sounds like a really good price I would stay away from it even more.

Well, he said that when he shifted to NY state, they wanted him to pay sales tax on the car even though he had done that in Kansas and were refusing to budge on it. He didn't want to do that - and hence has had the car sitting around while he uses his other mode of transport.

This is a really good deal in terms of VFM, and the carfax is also spotless. Infact, the car has 3 years of the original warranty still left. And he has the title in hand - apparently in NY state, they hand you the title even if you have some lien on your car.

I appreciate your suggestions and comments - and look forward to more !

Thank you.

[Stratford, Ct. Resident]

Originally Posted by pplaza3216

And he has the title in hand - apparently in NY state, they hand you the title even if you have some lien on your car.

I appreciate your suggestions and comments - and look forward to more !

Thank you.

Yep, i didn't realize NY issues titles with lienholder information on them.NYS DMV - Vehicle Registration - Title Certificates and Vehicle Ownership (http://www.nydmv.state.ny.us/regtitle.htm - broken link)

[ovcatto]

I think that sunsprit gave you the best advice outside of a law firm and you should follow it to the letter.