Driving automobiles

How to buy used car from person who needs proceeds to pay off loan

We have found a used car that we want to buy.  The sellers are upside-
down; they owe a bit more than they are getting for the car.  They
need our money to pay off the loan so we cannot get a clear title at
the same time that we give them money.

We plan to give them a cashiers check made payable to their lender.
They are going to get a Bill of Sale from the DMV and have their
signatures notarized.  (I don’t know anything about such a thing as a
Bill of Sale being available from the DMV but they seem pretty sure
that it is available.)  They will let us take delivery of the vehicle
when we give them the check, and say that they will Fed-Ex the check
to the lender and should have the title for us in about 10 days.

This is a tricky situation but I’m sure that others have dealt with
it.  We have been inside the sellers’ home, have met their kids, and
feel comfortable dealing with them.  Is there any advice you folks can
offer?

Thank you.

.
posted by admin in Uncategorized and have Comments (13)

13 Responses to “How to buy used car from person who needs proceeds to pay off loan”

  1. admin says:

    "Valley Girl" <l…@mindspring.com> wrote in message

    news:1192160903.972678.148570@y27g2000pre.googlegroups.com…

    - Hide quoted text — Show quoted text -

    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

    They can’t get a bill of sale for the car until the lender releases it,
    assuming the lender holds the car as security on the loan.  I’d contact the
    lender directlly and get instructions from them.  You aren’t buying the car
    from the current ‘owners’ you’re buying it from the lender.  Could be
    everything is fine, but deals like this don’t always work out the way the
    parties intend.  I’d be very careful.  What happens if your check somehow
    gets lost in transit to the lender?  Just my thoughts, I hope everything
    works out for you.  Not getting the title in your name would turn out to be
    a real nightmare, even though you have the car in your hands.

    Alan

  2. admin says:

    - Hide quoted text — Show quoted text -

    Valley Girl wrote:
    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    To be safe you should transact the entire deal at the lender’s office,
    that way you can get the released title immediately. Otherwise, the way
    you’ve outlined it above your are still exposed to the danger of not
    receiving clear title to the vehicle, especially if they happen to owe
    more to the lender than you are paying for the car.

    Or, another method would be for you to hire an attorney for the
    hour or two it will take to shepherd this deal safely to conclusion.

    - Hide quoted text — Show quoted text -

    > Thank you.

  3. admin says:

    Valley Girl <l…@mindspring.com> wrote in news:1192160903.972678.148570
    @y27g2000pre.googlegroups.com:

    - Hide quoted text — Show quoted text -

    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

    I guess it depends on the laws in your area.

    I bought a car years ago where the seller admitted to me he still owed
    money on it. I went to our provincial government’s Liens Office
    (no Internet back then) and got a printout of all the registered liens on
    the vehicle. There was only the one the seller told me about.

    I then called the bank branch that had registered the lien and asked how
    much it would take to discharge the lien. The lady wouldn’t tell me of
    course, so I just threw out "what if" numbers until she said "yes".

    I then made out a check for that amount to the bank (NOT the SELLER), and
    gave that to the seller. We concluded the transaction and I later changed
    the ownership over. No problem.

    It would possibly have been better if I had driven the check over to the
    bank myself to make sure they got it, but distance and time were factors.


    Tegger

  4. admin says:

    On Oct 11, 8:48 pm, Valley Girl <l…@mindspring.com> wrote:

    - Hide quoted text — Show quoted text -

    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

    I wouldn’t touch it that way.  It smells of a scam or at least opens
    the door to a possible scam.  Others have suggested better and safer
    ways

    Harry K

  5. admin says:

    On Oct 11, 11:48 pm, Valley Girl <l…@mindspring.com> wrote:

    - Hide quoted text — Show quoted text -

    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

    We encountered a situation not unlike that when buying a car for my
    daughter to take to college.  The solution was to check the title
    document and confirm the loan and proposed payoff with the lender.  A
    sales agreement was written and a cashiers check payable to the credit
    union for payment of the loan was  given the seller.  We took
    posession of the car.  It all went smoothly.  Given that loan-to-value
    is upside down you might want to close this deal at the lenders
    office.  You hand the lender a cashiers check for the purchase price
    and the seller hands the lender a check for the shortfall and  you get
    the title with proper endorsement.

  6. admin says:

    - Hide quoted text — Show quoted text -

    Valley Girl wrote:
    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

    Like others have said, you need to deal directly with the lien holder.

    A ‘notarized’ signature on a ‘deal’ is nothing but a scam artist at work
    and means nothing except run fast!

    "I swear I am who I say I am?"  Give me a break….

    Mike

  7. admin says:

    On Thu, 11 Oct 2007 20:48:23 -0700, Valley Girl <l…@mindspring.com>
    wrote:

    >We have found a used car that we want to buy.  The sellers are upside-
    >down; they owe a bit more than they are getting for the car.  They
    >need our money to pay off the loan so we cannot get a clear title at
    >the same time that we give them money.

    I did something like this once.  They too couldn’t pay off the loan,
    they ssid, until they had my money.

    I went over, signed a short contract for sale identifying the car by
    DIN and saying it would be free of all liens and encumbrances, and
    gave them a little more than 5000 in cash, got a receipt for the
    money.    AIUI, none of this works if they skip town or have no money
    to pay me back.  Perhaps they rent their house.  A lot of houses are
    sold to the first resident, but when he leaves, he keeps the house as
    an investment and rents it.

    They had said that one of them would go to the bank the next morning
    and pay off the loan.

    And they did that, and the next day included in the papers iirc was
    something that showed the car had been paid off.

    I guess I didn’t pick up the car until the second evening, because I
    have no friends willing to take off from work just for something like
    this.

    I too had been in their home, which it seemed they owned, and I too
    trusted them.  AT the same time that I thought the man I dealt with
    was lying.

    He had a teenage sun and a divorcing prgnant daughter, who had left
    her husband and was living at home again.  So there were four of them
    with 5 cars iirc.  He said they all wanted to drive the one he was
    selling me, because it was a convertible, and by selling it he would
    solve that problem.  That’s got to be the stupidest story I ever
    heard.  If they all liked driving it, work out a system and sell one
    of the other cars.  He must have been lying.

    He said his 17 year old son had bought the car he was selling, which
    was about 7 years old, 6 months earlier, but now had bought a brand
    new car.  Their house was nice, but I’m sure it had a mortgage and
    what kind of parents let a 17 y.o. buy a brand new car.  Plus the new
    one wasn’t a convertible, so it seemes to me, he loses his turn at
    driving the convertible they did have.  That part seems almost like a
    lie too.

    Nonetheless, I bought the car and spent NO money on repairs in the
    first 10 or 20,000 miles, which was more than 2 years in my case.
    There was nothing wrong with the car, even though it was 7 years old.
    (all my cars are 7 years old when I buy them and only one had anything
    seriously wrong with it, which I should have noticed if I had been
    paying attention, but I still would have bought the car for the same
    price.)

    I like the idea of calling the lender and asking, if there is any
    problem with the sale. Ask how much is owed?  Why not get a contract,
    and mail the check yourself, or together. Or go there.  Be apologetic,
    but say your father insisted that you do it that way.  You can be 60
    years old and still have to do what your father or mother says on
    certain things. Money is usually the father.

    >We plan to give them a cashiers check made payable to their lender.
    >They are going to get a Bill of Sale from the DMV and have their
    >signatures notarized.

    Where is that necessary? Not in Maryland.  Is that the normal mthod in
    our state, What state is that?????.  Here the seller signs something,
    I forget what, either the back of the registration or a form, and
    doesn’t have to notarize anythying, and the buyer gets the car
    registered on what he signs.

    When people offer more than is necessary, it makes me suspicious.
    Maybe they don’t mean a bill of sale.  Maybe they mean possession of
    the Registration or Title.  Do you live in a Title state.  NOt every
    state has titles for cars.

    How do you know the car is worth buying?  Cases on the people’s court
    all the time where the car looks nice and runs well for 2 miles, but
    has loads of problems.  I never get a mechanic to check the car out,
    because I a) think I can tell a good car from a bad car like a
    mechanic can, almost and b) I’m playing the odds and haven’t had a
    lemon yet (5 cars in 35 years).

    Is this a model that is hard to find?  Why this car?

    > (I don’t know anything about such a thing as a
    >Bill of Sale being available from the DMV but they seem pretty sure
    >that it is available.)

    Look at the DMV webstite.  Or better yet call them.  

    >  They will let us take delivery of the vehicle
    >when we give them the check,

    If they said that, don’t let them change their minds.  Although the
    car won’t be of much use.   I got caught driving my new car on my old
    plates, but he let me go because it was the day after the sale, but 10
    days of driving with no registration is looking for trouble.  STill,
    take the car.

    >and say that they will Fed-Ex the check
    >to the lender and should have the title for us in about 10 days.

    Like I say, they borrowed their money from a bank five miles away.
    Didn’t take no 10 days, took an hour or less.  If I could have gotten
    a ride, I could have gotten the car at 11 in the morning.

    >This is a tricky situation but I’m sure that others have dealt with
    >it.  We have been inside the sellers’ home, have met their kids, and
    >feel comfortable dealing with them.  Is there any advice you folks can
    >offer?

    How much money do they owe on the car?

    >Thank you.

    If you are inclined to email me
    for some reason, remove NOPSAM  :-)

  8. admin says:

    "Mike Romain" <roma…@sympatico.ca> wrote in message

    news:470f944a$0$30673$9a6e19ea@unlimited.newshosting.com…

    - Hide quoted text — Show quoted text -

    > Valley Girl wrote:
    >> We have found a used car that we want to buy.  The sellers are upside-
    >> down; they owe a bit more than they are getting for the car.  They
    >> need our money to pay off the loan so we cannot get a clear title at
    >> the same time that we give them money.

    >> We plan to give them a cashiers check made payable to their lender.
    >> They are going to get a Bill of Sale from the DMV and have their
    >> signatures notarized.  (I don’t know anything about such a thing as a
    >> Bill of Sale being available from the DMV but they seem pretty sure
    >> that it is available.)  They will let us take delivery of the vehicle
    >> when we give them the check, and say that they will Fed-Ex the check
    >> to the lender and should have the title for us in about 10 days.

    >> This is a tricky situation but I’m sure that others have dealt with
    >> it.  We have been inside the sellers’ home, have met their kids, and
    >> feel comfortable dealing with them.  Is there any advice you folks can
    >> offer?

    >> Thank you.

    > Like others have said, you need to deal directly with the lien holder.

    > A ‘notarized’ signature on a ‘deal’ is nothing but a scam artist at work and
    > means nothing except run fast!

    > "I swear I am who I say I am?"  Give me a break….

    Back-off man! I’m "notarized" !

    Notary …? …. Notary ….? We don’ got ta show you no steenken NOTARY !!

    - Hide quoted text — Show quoted text -

    > Mike

  9. admin says:

    In article <1192160903.972678.148…@y27g2000pre.googlegroups.com>,
    Valley Girl  <l…@mindspring.com> wrote:

    >We have found a used car that we want to buy.  The sellers are upside-
    >down; they owe a bit more than they are getting for the car.  They
    >need our money to pay off the loan so we cannot get a clear title at
    >the same time that we give them money.

    You’ve managed to type that without smelling a scam?

    >This is a tricky situation but I’m sure that others have dealt with
    >it.  We have been inside the sellers’ home, have met their kids, and
    >feel comfortable dealing with them.  Is there any advice you folks can
    >offer?

    Walk away.

      There’s no such thing as a free lunch, but certain accounting practices can
      result in a fully-depreciated one.

  10. admin says:

    >We have found a used car that we want to buy.  The sellers are upside-
    >down; they owe a bit more than they are getting for the car.  They
    >need our money to pay off the loan so we cannot get a clear title at
    >the same time that we give them money.

    >We plan to give them a cashiers check made payable to their lender.
    >They are going to get a Bill of Sale from the DMV and have their
    >signatures notarized.  (I don’t know anything about such a thing as a
    >Bill of Sale being available from the DMV but they seem pretty sure
    >that it is available.)  They will let us take delivery of the vehicle
    >when we give them the check, and say that they will Fed-Ex the check
    >to the lender and should have the title for us in about 10 days.

    How about this approach?  THEY give YOU a certified check made
    payable to their lender, the keys to the car, the car, and a signed
    statement authorizing transfer of the car to you.  You cash the
    certified check and wait a sufficient period of time for it to come
    back to you as forged or stolen if it is.  (I think this is a minimum
    of 60 days, and 7 years is probably sufficient as long as no foreign
    banks are involved).  YOU take the cash from their check, plus your
    check, to the lender.  You get back a title (I think that’s what
    is being called a "bill of sale").

    Now, if these terms are acceptable to the sellers, they are probably not
    scammers, but they are fools, as YOU could be the scammer.

    This sort of thing is done all the time with house sales using an
    escrow agent.  I think you could use their lender as an intermediary.
    If you hand over the check, you walk out with ownership of the car.
    Settle for nothing less.

    I thought a "bill of sale" was something created by the seller as
    documentation of the deal, laying out what was sold, price, date,
    terms of the deal, etc.  It acts as a receipt for the buyer, and
    in the case of cars, it may be required by the state to determine
    the amount of sales tax due, a necessary part of transferring a
    title that the state will insist on.  In the case of cars and houses,
    it doesn’t do the transfer of the title or deed by itself.

    - Hide quoted text — Show quoted text -

    >This is a tricky situation but I’m sure that others have dealt with
    >it.  We have been inside the sellers’ home, have met their kids, and
    >feel comfortable dealing with them.  Is there any advice you folks can
    >offer?

  11. admin says:

    On Fri, 12 Oct 2007 03:11:53 -0400, mm <NOPSAMmm2…@bigfoot.com>
    wrote:

    >If they said that, don’t let them change their minds.  Although the
    >car won’t be of much use.   I got caught driving my new car on my old
    >plates, but he let me go because it was the day after the sale, but 10
    >days of driving with no registration is looking for trouble.  STill,
    >take the car.

    Of course if it’s a real scam, they’ll have another set of keys and
    they’ll come over to your house and take the car back.

    If you are inclined to email me
    for some reason, remove NOPSAM  :-)

  12. admin says:

    On Oct 13, 12:51 pm, mm <NOPSAMmm2…@bigfoot.com> wrote:

    - Hide quoted text — Show quoted text -

    > On Fri, 12 Oct 2007 03:11:53 -0400, mm <NOPSAMmm2…@bigfoot.com>
    > wrote:

    > >If they said that, don’t let them change their minds.  Although the
    > >car won’t be of much use.   I got caught driving my new car on my old
    > >plates, but he let me go because it was the day after the sale, but 10
    > >days of driving with no registration is looking for trouble.  STill,
    > >take the car.

    > Of course if it’s a real scam, they’ll have another set of keys and
    > they’ll come over to your house and take the car back.

    > If you are inclined to email me
    > for some reason, remove NOPSAM  :-)

    OK, OP here.

    To address the questions so far…

    When live in Winchester, Virginia and the vehicle was purchased in
    Vermont.  The lienholder is a small credit union in Vermont.  The
    sellers now live in West Virginia.  For those who are unfamiliar, our
    area has a small city every 20-30 miles with cattle farms, horse
    farms, and orchards in-between.  It is not "rural", but has a finite
    supply of used cars that are not being sold at some questionable mom &
    pop dealership.

    When you do a Carfax check, make sure the price is in line with the
    NADA guide, and make sure that Consumer Reports likes (or at least
    does not trash) the vehicle you are looking at, plus inspect and drive
    the car yourself, the pool of acceptable cars in any given price range
    drops considerably.  Even factoring in the high mileage for its age,
    this vehicle is priced well below blue book.  It drives wonderfully
    with no drifting, no vibration at high speed, even braking, and no
    fluid leaks after idling and revving in one spot for several minutes.
    All power options work and the tires have even wear.

    I spent a lot of time thinking about this and proposed the following
    change to the seller:

    They get a cashiers check for the amount that they owe for the vehicle
    over what they are getting from us.  We have our cashiers check.  We
    contact the lender directly to make sure that they are ok with what we
    have planned (hypothetically, as they cannot disclose customer
    information to us).  (The sellers are supposed to do the same.)  We
    send our check directly to the lender stating that the owner will be
    sending a check of their own, that we are purchasing the vehicle, that
    the title should be sent to us, and that, if they do not receive, from
    the seller, a check with similar instructions within 5 days, then our
    check should be returned to us.

    Assuming that the title arrives, we then meet with the seller to have
    the title signed and collect the vehicle and the signed Bill of Sale,
    which simply states the names of both parties, the selling price, the
    date, and the VIN number.

    The sellers could refuse to sign the title once we meet with them but
    there is going to have to be some trust, somewhere.  There are a lot
    of sleazebags out there, for sure, but we are being as cautious as we
    can without giving up on the vehicle entirely.

    FWIW, the sellers would let us have possession of the vehicle now, but
    we feel that that would just be torture for our son to have a car
    sitting in the driveway that he cannot drive for a week.

    I must add, finally, that just because someone needs the proceeds from
    a sale in order to pay off a loan and get clear title, it does not
    necessarily make them suspicious or deadbeats.  Not everyone makes
    $80k a year.

    I am truly grateful for all of the insightful responses.  Your
    feedback helped me to formulate a plan, and also to put the reigns on
    my husband, who wonderfully assumes the best in everybody.

    I will continue to watch for your comments as none of this will take
    place until Monday.

    Thank you.

    –Lyne

  13. admin says:

    "Valley Girl" <l…@mindspring.com> wrote in message

    news:1192160903.972678.148570@y27g2000pre.googlegroups.com…

    - Hide quoted text — Show quoted text -

    > We have found a used car that we want to buy.  The sellers are upside-
    > down; they owe a bit more than they are getting for the car.  They
    > need our money to pay off the loan so we cannot get a clear title at
    > the same time that we give them money.

    > We plan to give them a cashiers check made payable to their lender.
    > They are going to get a Bill of Sale from the DMV and have their
    > signatures notarized.  (I don’t know anything about such a thing as a
    > Bill of Sale being available from the DMV but they seem pretty sure
    > that it is available.)  They will let us take delivery of the vehicle
    > when we give them the check, and say that they will Fed-Ex the check
    > to the lender and should have the title for us in about 10 days.

    > This is a tricky situation but I’m sure that others have dealt with
    > it.  We have been inside the sellers’ home, have met their kids, and
    > feel comfortable dealing with them.  Is there any advice you folks can
    > offer?

    > Thank you.

        (1)As AP has already said, go with owner to lender and conclude
    transaction, face-to-face w/all 3 parties present.  Buyer gets to see all
    necessary transactions occur.  There will still be a delay in buyer getting
    title, as lender waits for checks to clear, as even a cashier’s check from a
    bank directly across the street is still "uncollected funds".
         (2) Make your check payable to OWNER AND LENDER and be sure to write on
    front lower left AND on both rear signature areas of your check "TITLE MUST
    BE ATTACHED, CLEAR OF ANY LIEN(S)" and include the serial # as read from the
    vehicle–not any registration card, ins. paper, etc.  The word "ALL" cannot
    be over-emphasized, as owner could feasibly owe a 2nd (or 3rd, or more) lien
    to other lenders.  Of course in either case you be sure to get a bill of
    sale–notarization is not necessary in SOME states; yet more important,
    notar’n IS necessary in some other states.
        The 1st way is self-explanatory.  The 2nd protects the buyer, as his
    check cannot be cashed w/o it being "sent for collection"–the title-holding
    lender puts check AND lien-free title in the same envelope and sends all to
    buyer’s bank.  Buyer’s bank then calls for buyer to come in and physically
    inspect title and give permission to his bank to release funds to the
    lending bank.
        The 2 procedures above that I called safe are both based on 49 years of
    buying (and selling) cars from numerous, yet not all, states.
    HTH, sdlomi2