Can I Sell a Car With a Lien?

While it is possible to sell a car with a lien, it can be more difficult to find a buyer, especially if you are looking to sell to a cash for cars company. When it comes to selling a car, one of the biggest obstacles you may face is having a lien on the vehicle. A lien is a legal claim on a car that is held by a lender or other party until the debt is fully paid off.

What is a Car Lien?

When you finance a car, the lender holds a legal claim on the vehicle until you pay off the loan. This legal claim is known as a lien on the vehicle. If you don’t pay off the loan, the lender can repossess the car and sell it to recover their money.

A lien on a car can be placed by a variety of entities, such as banks, credit unions, and auto finance companies. The lien gives the entity the right to take possession of the car if the owner fails to make payments on the loan.

If you’re looking to sell a car with a lien on it, the lienholder must be paid off before you can transfer ownership to the buyer. This is because the lienholder has a legal claim on the vehicle, and the buyer won’t be able to register the car in their name until the lien is satisfied.

Cash for cars companies typically don’t buy cars with liens on them because it can be complicated and time-consuming to pay off the lien. They also want to ensure that they’re buying a car with a clear title, which means there are no liens on the vehicle.

Why Cash for Cars Companies Don’t Buy Cars With Liens

When you’re trying to sell a car that still has a lien on it, you might find that cash for cars companies won’t buy it. This is because cash for cars companies want to minimize their risk and maximize their profit. Here are a few reasons why cash for cars companies don’t buy cars with liens:

Upside Down

By far, the biggest reason why most cash for cars companies won’t buy your car if it has a lien is because in most cases, you’re upside down. If you owe more on your car than it’s worth, you’re upside down on your loan. If they pay off the lien and buy the car from you, they might end up losing money if they can’t sell the car for more than they paid for it.

Example of this: Let’s say you still owe $4,000 on your car and a cash for cars company offers you $3,000. That means that you owe more than the car is worth and no company will want to take that deal since they’ll typically sell the car for less than $4,000 if they are paying $3,000.

Liens Mean Risk

When you have a lien on your car, it means that there is still money owed on it. This makes the car a risky investment for cash for cars companies. If they buy the car and pay off the lien, they are taking on the risk that the lien might not be the only debt on the car. There could be other liens or debts that the seller didn’t disclose. This could end up costing the cash for cars company more money than they expected.

Profit Margins

Cash for cars companies are in the business of making a profit. When they buy a car, they want to be able to resell it quickly and at a profit. If they buy a car with a lien, they might not be able to sell it as quickly or for as much money. This reduces their profit margin and makes the investment less attractive.

The Role of the Lienholder

When you take out a loan to purchase a car, the lender places a lien on the vehicle. This means that the lender has a legal claim to the car until the loan is paid off. The lienholder is typically the auto loan lender, but it can also be another entity, such as a bank or credit union.

The loan amount is the total amount of money borrowed to purchase the car. The outstanding balance is the amount of money that is still owed on the loan. The payoff amount is the total amount needed to pay off the loan in full.

When you decide to sell your car, the lienholder plays a crucial role. Since the lienholder has a legal claim to the car, they must be paid in full before the title can be transferred to the new owner. This means that the payoff amount must be paid in full before the car can be sold.

Cash for cars companies typically do not buy cars with liens because they do not want to deal with the complicated process of paying off the lien and transferring the title. It is much easier for them to buy cars that are owned outright.

In some cases, the lienholder may be willing to work with the seller and the cash for cars company to facilitate the sale. However, this is not always the case, and it can be a time-consuming and complicated process.

The Role of the DMV in Car Sales

When it comes to selling a car, the Department of Motor Vehicles (DMV) plays a crucial role in ensuring that the transaction is legal and legitimate. The DMV is responsible for issuing titles, registering vehicles, and maintaining records of ownership.

One of the main reasons why cash for cars companies don’t buy cars with liens is because the DMV won’t transfer ownership of a vehicle with an outstanding lien. This means that the seller must first pay off the lien before they can sell the car.

Additionally, the DMV requires that the seller provide a clear title to the buyer. This means that there can be no outstanding liens or other issues that would prevent the buyer from obtaining clear ownership of the vehicle.

It’s important to note that the DMV is not the same as the state transportation agency. While the DMV handles vehicle-related issues such as titles and registration, the state transportation agency is responsible for maintaining roads and highways, issuing driver’s licenses, and overseeing public transportation.

Checking for Liens

Before selling your car to a cash for cars company, it is important to check if there are any liens on the vehicle. Liens are legal claims on a vehicle that can prevent the owner from selling it until the debt is paid off. Here are some ways to check for liens:

VIN Check

The Vehicle Identification Number (VIN) is a unique 17-digit code assigned to every vehicle. You can use the VIN to check for liens through a lien search service. This service will search public records to see if there are any outstanding liens on the vehicle.

Vehicle History Report

A vehicle history report can also provide information about liens on a car. It will show the vehicle’s ownership history, including any liens that were placed on the car during previous sales. You can obtain a vehicle history report from a reputable provider.

Lien Search

You can also conduct a lien search on your own by contacting the DMV or a lien search service. This will involve providing the VIN and paying a fee to obtain the necessary information.

It is crucial to check for liens before selling your car to a cash for cars company. If there are any outstanding liens on the vehicle, the sale cannot proceed until the debt is paid off. By conducting a thorough lien search, you can avoid any complications and ensure a smooth transaction.

How Do I Sell a Car with a Lien?

If you have a car with a lien, your best option is to pay off the lien first, get a clear title and then try to sell it. The reason for this is that most companies will not buy a car with a lien as stated above for many reasons. Work with your lien holder to find out the remaining balance, clear that balance and wait for a lien release or a new title. Once that is done, you can go shop for offers on your car.