Purchasing a car from a Dealer carfax shows lien- Help?!? (for sale, insurance)

[btippie]

So we thought going to a dealer would save the hassle of worrying about a hidden lien/ loan on title. We test drove the vehicle and love it. We put a deposit down and came back home with the carfax he printed for us as we were heading out the door. We already have the same vehicle just want another we love the brand of car. So we know its a good car after the test drive. An we have purchased cash before so this isn't our first go around. But when we asked him if the vehicle has any liens or loans on the title he laughed and said not yet. He brushed it off as a joke. But we had already given the deposit and it got our minds to thinking wtf did he mean. So on the way home my husband got to looking at the Car-fax more in depth. It shows the first owner purchased it as a Fleet vehicle and the title didn't show a lien/loan on the title. He put it up for auction, it sold. The second owner purchased it from the auction that's when it shows there was a lien/loan placed on the title. He owned it for 2 yrs 5 months then sold it 11/03/2016. The third owner purchased it on 12/29/2016 an again it shows that a lien/ loan reported on title. But the thing that stands out to us the most the vehicle has been on a car selling website that states the days it has been up for sale and it shows 319 days for sale from the dealership. I don't get that if the last reported owner only has had it since December than why does it show it has been on there for almost a year. I asked the manager at the dealership about it and he said well this brand of car doesn't sell fast. I had 3 other vehicles of this brand lined up as a option and they all sold one 10 minutes before I got there. SO I know that is not true.

1) Can a used car dealership sell a vehicle to me if the vehicle has a Lien/loan reported on the title?

2) Why was a loan/ lien placed on the title after the vehicle was purchased from the auction?

Should we walk away from this deal? Any Help is appreciated in advance.

[elnina]

If you are buying from a dealer, ask the dealer if the title is clean.
Contact the company on the lien and see if it has been satisfied.
I can't see how they could sell it without a clean title, but laws are different from state to state.

I think the dealer is legally obligated to ensure that the title is clean before selling. That being said, though, get the VIN number and call the DMV.

BTW: lien record is just a record that someone had a loan. Liens are not bad things, it just means that a loan was taken out with the item (house, car, whatever) as collateral. It is perfectly normal.

[marksmu]

Originally Posted by elnina

BTW: lien record is just a record that someone had a loan. Liens are not bad things, it just means that a loan was taken out with the item (house, car, whatever) as collateral. It is perfectly normal.

Elina - this is NOT correct, and is bad advice. A person who buys a vehicle subject to a lien on the title, takes the vehicle subject to that lien. That means that the lien holder (usually a bank) holds superior rights in the vehicle.

If the lien is not paid, the bank may repossess the car from the individual who bought it subject to the lien. The bank may then sell the car to satisfy the lien. Any remaining proceeds after the sale would then goto the person who bought subject to the lien.

Example. Car is worth $20,000 - and the bank has a lien for $10,000. If you buy that car, without having the owner (dealer, or individual) pay off that lien AND you have knowledge of the lien, then you are buying it at your own risk. Say you pay $20,000....and the seller does not pay off the lien. 2 weeks later the bank repossess the car and sells it for $14,000 at auction. The bank takes its $10,000 lien plus the cost to sell (say $2000) and you are entitled to receive back only the excess, in this case $2000.

There is an escape clause for an innocent purchaser without knowledge, but that ONLY exists if the lien holder failed to timely file the lien, or did not file it at all.

NEVER buy anything that has a lien on it that is not cleared at the time of purchase. When you buy a house with a lien, the lien is ALWAYS cleared by the title company at the time of closing. That is why they will issue title insurance.

[TexasRedneck]

Call the lien holder and ask if the lien has been paid. If so, it's just a matter for the dealer to get the release of lien. Do NOT go forward with the purchase until you KNOW - which is why I say for YOU to call them initially...