Buying a car with bank lien off private seller in California

wildthing · 12-22-2021, 06:19 AM

Hey, has anybody ever actually bought a car from a private seller in California where the car has an existing bank loan? I've been reading online and much of the advice is pretty generic... have seller contact bank... pay at bank... wait for title...

If I pay off the bank, do they have paperwork to declare that I paid for it therefore have DMV mail the title to me, or will it still go to the seller, and the seller has to give it to me? I presume large banks participate in some form of electronic lien system, so they don't actually hold the paper title.

If they don't use that particular electronic system, do they actually have the title in hand? I'm thinking there's still some central office that has to process it, and then mail it.

All this because I'm supposed to have 10 days to register the car in my name, and the number one requirement is: a title!

All the best and thanks as usual for all the great insight.

GH85Carrera · GH85Carrera's Garage

A lot will depend on the bank. A nice bank will be helpful. Some banks will tell you to pound sand.

Scott Douglas · Scott Douglas's Garage

I'd look at the paperwork the seller has for the car. The title probably has the bank as owner and him as registered owner or something like that. When we had cars financed thru the bank our titles had the bank's name on it and ours. Once paid off, the bank informs the state and they sent us the new title with us named as owners.
I would just do the transaction at the bank or a branch thereof. I can't imagine them not being helpful as they want their money. I would just make sure any money you are giving the seller goes to the bank instead of him saying he'd give it to the bank.

asphaltgambler · 12-22-2021, 06:35 AM

Yes, ^^^^^do the transaction at the bank, copies of all documents, notarized.

speeder · speeder's Garage

In CA., the registered owner holds the title even if there is a loan/lien on the vehicle. The bank or credit union is listed under, "legal owner" and there is a place for them to sign off on the title as well as a place for the registered owner.

All transactions on private party sales with liens need to be done at the bank or lending institution, that way you can pay off the loan, (or seller pays off the loan immediately before sale), and both "owners" can sign off on the title at the same time. Typically, the buyer will pay off the loan and give the private party seller the difference or change left over. Buyer leaves with vehicle and signed-off title in hand, knowing 100% that it's free and clear.

Doing it any other way is asking for a world of hurt and will lead to starting another thread here titled, "how do I get my title, etc..."

speeder · speeder's Garage

Quote:

Originally Posted by asphaltgambler

Yes, ^^^^^do the transaction at the bank, copies of all documents, notarized.

CA. does not use notaries for vehicle transactions or title transfers. Otherwise, correct.

speeder · speeder's Garage

vash · vash's Garage

i did it.

my big takeaway from the experience is: it would have to be a spectacular vehicle for me to do it again.

my seller was a bit of a wild card. we did do the transaction at the bank. but banks dont carry the title. i then had to wade thru the wonderful world of the DMV to get it all done. there is way too much downtime for me to think about what can go wrong. it literally rides on the seller doing the right thing.

a good seller would nut up and pay it off first, get the title and then sell it.

Bugsinrugs · 12-22-2021, 09:13 AM

When I bought my Tacoma the seller and I went to Toyota offices as he had financed through them. I paid off his loan and gave him the difference directly. Toyota mailed me the pink slip but gave me documentation that I now owned the vehicle.

GH85Carrera · GH85Carrera's Garage

Quote:

Originally Posted by vash

i did it.

my big takeaway from the experience is: it would have to be a spectacular vehicle for me to do it again.

my seller was a bit of a wild card. we did do the transaction at the bank. but banks dont carry the title. i then had to wade thru the wonderful world of the DMV to get it all done. there is way too much downtime for me to think about what can go wrong. it literally rides on the seller doing the right thing.

a good seller would nut up and pay it off first, get the title and then sell it.

One of our new local PCA members just moved to OKC from California. He has a neat 911, and two daily driver vehicles. He said one weekend he psyched himself up all weekend to go get a tag for one of the cars. He said he looked on line for where the DMV and car registration was and was puzzled when he could not find it. He asked a neighbor and they directed him to the nearby Tag Agent. He walked in an it was a nice looking place with two pretty women that were super friendly and he had a tag in hand in a few minutes, and was standing there almost stunned when one of them asked if he had other cars. He said he did, but he had not brought the documents for them. They said no problem, we will hold the next two tags for you so your tags will have consecutive numbers. He drove home, got the titles and insurance for them, and had two more tags all in less than 45 minutes. He said if he had not had to drive home it would be a 10 minute visit. He said he was almost excited to go back next year and pay just 21 bucks for his 912's tag.

wildthing · 12-22-2021, 12:52 PM

Quote:

Originally Posted by vash

i did it.

my big takeaway from the experience is: it would have to be a spectacular vehicle for me to do it again.

my seller was a bit of a wild card. we did do the transaction at the bank. but banks dont carry the title. i then had to wade thru the wonderful world of the DMV to get it all done. there is way too much downtime for me to think about what can go wrong. it literally rides on the seller doing the right thing.

This is what I was afraid of. It's an early 991, so a little above 70K. I am hoping these sellers do have the cash to pay off the loan first but you'll never know.

Thanks Dennis for the picture of the title. I didn't think to look at mine. I will have to ask the seller to inquire at his bank.

Steve Carlton · 04:17 PM

If you're financing it, your bank/credit union can handle the payoff of the title with the other lender. If you're not financing it, you can discuss it with the seller's lender (he will probably need to give them his permission for you to talk with them). A lot of times, they will send the signed off title directly to you if they have it. If it has a paperless title, the DMV will mail it out after being instructed to do so by the current lienholder, and probably it will go to the previous owner. Find out up front before you stress out about this or that.

If the current lender has the title, you might need them to advance it to the lender's branch so they can give it to you. A lot of times they're in some central office somewhere else.

I've done deals where a cashier's check is FedEx'd to the current lender with instructions to send it to the buyer. The seller makes sure the check is good (and can't be cancelled), and any difference goes to the buyer or the seller, depending if there's positive or negative equity. You both watch the check and the paperwork/instructions go into a FedEx box. You need to make sure everything is set up and understood in advance. Even if you don't get the title, you've got the car and paperwork showing you paid for the car.

wildthing · 12-22-2021, 04:45 PM

Thanks for all the responses. Will get more details from the seller and press him to talk to his lender (if it checks out...)

speeder · speeder's Garage

$70k for an early 991? That must be pandemic pricing. One of my friends bought one back in 2014 for less than that and it was a manual 991S in black, showroom condition.

aigel · aigel's Garage

I am with Vash. I wold not want to deal with the hassle. Also speaks poorly for the previous owner. If they are that strapped for cash that they can't at least temporarily pay it off, were they maintaining the car properly or cutting corners? I have bought several cars that were paid off just before the sale.

And yes, Denis, Porsche pandemic pricing is crazy.

wildthing · 07:49 PM

Yes, pandemic pricing... that or they are pricing it to NOT sell. I noticed there seems to also be a Bay Area premium. These ads have been sitting for weeks so I am hoping they will negotiate. I completely missed a driven 993 over the weekend for $40K with 175K miles. One owner!!!

stomachmonkey · 12-22-2021, 09:02 PM

You get the payoff from the bank.

Pay it and deduct from sale price.

Now you can either title the car right away and receive one with a lien on it but you will also receive a lien release from bank that future owner can use to get a lien free title or you wait to get lien release and then title it to get a lien free title.

This is done every day and is normal with private party sales.

vash · vash's Garage

Quote:

Originally Posted by stomachmonkey

You get the payoff from the bank.

Pay it and deduct from sale price.

Now you can either title the car right away and receive one with a lien on it but you will also receive a lien release from bank that future owner can use to get a lien free title or you wait to get lien release and then title it to get a lien free title.

This is done every day and is normal with private party sales.

Man. I almost need someone to draw me a flowchart.

Steve Carlton · 12-23-2021, 06:16 AM

Every state is potentially different. Every lender can be different. Even in California, there are lenders that have the title (usually in a main office) and there are lenders that have a paperless title. Each process is different. You'll probably need the seller's permission to discuss it with the lender. I'd ask the seller in advance if you make a deal, can you discuss the title transfer with his lender. The answer better be yes. If not, move on. Tie the car up with a deposit if you agree to buy the car.

wildthing · 02-10-2022, 07:28 PM

I'm going to buy the car... it doesn't sound like Bank of America will play ball and instruct the DMV to send the new title to me. I will have to wait for them to release the lien via ELT, DMV sends title to seller, then I pick it up from the seller and sign the thing. (The seller doesn't have the title, which seems accurate because that's how it was when I had my Camry and Sienna financed.)

So while I get the car immediately, I won't get the title immediately.