by Stuart Lawrence

Created on: September 23, 2010   Last Updated: September 24, 2010

Selling Vehicles with Liens

 Each day thousands of cars are bought and sold. A large percentage of these are financed (have loans with banks or finical institutions). Some people believe their car can not be sold until the loan is paid in full. It’s actually quite easy if correct steps are taken.

Some states are title holding states (the owner retains the title) while others are not and the title is held by the lender  All titles will show lien holder on the face of the title if any liens are active, and the date of the lien.

 Private sale:                                                                                                                               If the car is financed, and the owner wants to sell, there are options available. First, find out what the pay-off for the vehicle is from the lending institution. If the loan exceeds the value, the car can still be sold as long as the owner has sufficient funds to pay the overage once sale is complete. With this information, the owner can place an advertisement in several places such as news papers, or online sources.

When a sale is negotiated the owner and buyer must go to the lien holder together insure payoff is made, and obtain title or a lien satisfaction receipt (LSR) as most vehicle titles are now electronic (no printed title is held by the lender). The owner and buyer can then take the title or LSR to the DMV (Department of Motor Vehicles) and transfer ownership.

 Please note: when selling a vehicle, it is necessary to remove it from the owner’s name, before releasing the vehicle. Otherwise, they and their insurance can be held liable for any incidents involving the vehicle, and always ensure the transfer is complete before removing insurance coverage.

 If a paper title is held in another location, it may take up to two weeks for the

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