I'm about to purchase a used car from a private party. His bank owns the car and is out of state. Assuming I purchase it, he wants me to give him the money for the car and he will write me a receipt and give the car to me. Then he said he will take the money, pay the car off and when the title comes he'll give it to me.

Is there anything I should do to make sure he doesn't just take the money and not pay the car off? I don't want to have a car without a title in case he doesn't pay it off and I'm not sure what the best way is to make sure I protect myself. I don't have any suspicions of him, I just want to do whatever is safest for me.

Any suggestions or is this just a normal chance we take in buying a car like this?

Pay him on a business day during business hours and go to the bank with him to make sure he pays off the car.

ClaimsGuy said:Make your check to seller payable to seller and lienholder.

Call the lienholder, get a payoff amount and have seller give you a check for the payoff amount made payable to the lienholder.
Thanks for your advice.
I'm pretty sure he's going to want a bank draft. What do I write to make it payable to seller and lienholder?

When I get the check from the seller, how do I ensure that when I send it to the lienholder that the title goes to me and not him? Or would it go to him and I just pick it up when he gets it?

I think the only way to do this is at the seller's bank, in person. With the number of good, used cars available, this is an unnecessary risk, unless you can get the unencumbered title in hand when you turn the money over.

Making the draft payable to the seller and the bank will help ensure that he pays the car off, but will not ensure that you get the title.

Just an opinion...

rizorith said:I'm about to purchase a used car from a private party. His bank owns the car and is out of state. Assuming I purchase it, he wants me to give him the money for the car and he will write me a receipt and give the car to me. Then he said he will take the money, pay the car off and when the title comes he'll give it to me.

Is there anything I should do to make sure he doesn't just take the money and not pay the car off? I don't want to have a car without a title in case he doesn't pay it off and I'm not sure what the best way is to make sure I protect myself. I don't have any suspicions of him, I just want to do whatever is safest for me.

Any suggestions or is this just a normal chance we take in buying a car like this?

Depending on the bank, they may have an option for situations just like this, where the loan is paid off by a third-party, with the owner signing an agreement that the title is released to that third party.

I don't know if the sellers bank does this, but when I was paying off my loan there was a second pay-out option for that.

I was in a similar situation when buying my car. It was relatively inexpensive, so I gave seller a small deposit ($200), had him pay off the car with his friend's money and got it from him when he received the title.

delzy said:Get the number and call the bank holding th title. There are many ways to skin this cat. Make sure you and the lien holder are in synch to make it go down without a hitch. I think what will probably happen is you will have to make out two bank drafts. One for the remaining due to the bank and a smaller one to the owner (assuming he's not upside down). Get ready to spend half a day faxing and signing screwing around.

DO NOT PAY HIM FOR THE CAR.

I remember not long ago a local dealer went BK without paying off the bank for a bunch of trade-ins. Those people all got stuck paying off a car they didn't own any longer.The other classic one is that the seller mails you the title and it turns out that the car is salvaged. Buyer beware. Get that carfax report and look at the title before money changes hands!

Jus pay a small part of the purchase now.

That doesn't always work. Paying the seller a small part may not be enough for the seller to pay off the loan. Believe it or not, a lot of people don't have enough liquid fund to pay off a car loan, even if it's only for a day.

To OP: It adds a little risk when you are buying a used car and the seller doesn't have the title in hand. You should call his finance company and see if they have any advice. I am sure they deal with this type of stuff on a daily basis. Going directly to the finance company doesn't guarantee that you will get the title since paperwork may not be held at a B&M branch.

I try to stay from private party used car where the seller doesn't have title in hand. It's a little less risk many years ago but not now.

I purchased a 2007 Highlander last week from a independent dealer in TX ( I am in CA )for $29,700. I received the car 2 days back and all looks good. The dealer FEDEX the power of attorney and the bill of sale and odometer reader document to me. Before I bid on item I got his TX dealer license permit, drivers license, copy of carfax , copy of existing title ( which has actual owners name on it ) and TX state surety bond insurance for $25000. The title copy shows that the lein ( held by Toyota Credit corp ) has been released as I see the sign of someone from toyota credit on it. I felt safe and bid and won.

In TX dealers can sell cars without the title in their name. So the dealer is in process of transferring the title in his name and he will sign off and mail me the original title ( still hasnt come but I will give another week ).

In meantime I took car to CA DMV and they saw bill of sale and power of attorney and gave me a temporary registration till end of May. DMV asked me to get back with original title from TX dealer and they will issue the final registration to me.
Then I went to AAA ( for auto insurance ) and they added the car to my existing policy after seeing power of attorney, bill of attorney, and DMV registration.

So now I am waiting for original title from dealer.

How am I safe and pretty sure I can get the title?

1) Its a third degree felony to sell a car to someone without the dealer making sure that the title is without lein and is transferrable.
2) The surety bond of $25000 guarantees I get a clean title else I am getting $25000 from insurer ( Southern Insurance ).
3) eBay has VPP of $20000 on this auction and VPP guarantees upto $20000 if do not get a clean title from dealer.
4) Finally I can file a theft case against the dealer if he cant produce a clean title in court and sue his private dealership and retrieve the money I paid him.

Just an FYI as I am going thru a similar situation...

EDITED : I also asked CA DMV that in worst circumstance what happens if i never get the title from TX dealer. CA DMV said I can get the full CA registration and drive the car for n number of years but I CANT sell the vehicle.

oopsz said:A lot of lenders have a procedure for this. The owner fills out a form releasing title to someone else and sends it along with the payoff amount.

As an example, the form for toyota financial is here:
https://my.toyotafinancial.com/consumer/ShowBinary/BEA%20Repository/tfs/en_US/document/payoff_form_toyota.pdf

Thanks for the link. I'm dealing with a car that is financed through a small credit union in florida that doesn't seem to have forms like this drawn up. I realize the whole thing seems shady and a hassle, but honestly this car is a pretty good deal and I'd like to go through with the purchase as long as I can protect my interests.