Selling/Buying car with loan

NYSpeed Automotive
1

Hey guys,

I got a question about the process of selling/buying a car when a new loan is involved. Here’s the situation:

  1. I’m the owner/seller of my car. Car is registered and titled in NY.
  2. My car has clean title. No lien.
  3. Potential buyer would like to buy my car with loan (financing).
  4. Presumably at this point, the buyer is NYS resident and will be registering the car in NY.

My past experience with buying/selling most of the times involved cash deal only. So, I’m curious as to what will happen if this deal goes trough. The last time I had to deal with loan was when I bought a car that had a lien on it. The seller provided me with the lien release document from the bank and that was it.

So, assuming this deal goes trough, how does it exactly going to play out? I assume that all I have to care is getting the certified check from whatever financial institution the buyer gets the money from. We sign the bill of sale, followed by signing the back of the title proofing the transfer of ownership, and that’s that.

Does anyone know what will happen when the buyer registers the car at DMV? What is required for the buyer to show to the DMV that the car was purchased with loan (I assume that the new title will have lien info on it)? Does the financial institution requires additional steps before the car can be registered? Do I have anything to worry about? Any steps I have to safeguard me from any possible issues in the future?

2

I’m going to vote for it’s not your problem. Just make sure its a bank check.

3

When the buyer registers it he just pays taxes on it and if it was a vehicle loan the new title will have a lien on it. If he got a personal loan the title will be lien free. The financial institution he gets the loan from may ask for a copy of the title to be faxed to them depending on the type of loan they are getting.

4

Basically as you mentioned, the seller accepts the bank check and signs a receipt. If it’s a true secured loan by a bank, the buyer will have given the bank a VIN and proof of insurance at the time the check was provided. As I understand it, the bank will register the lien directly with the DMV. The DMV will verify the transaction and formally assign the lien prior to sending a new title to the buyer.

Good for you not knowing how this works. I wish more people lived without loans.

5

Thanks a lot, guys! That makes a lot more sense now.

I, as the seller, should have nothing to do with the financial institution, right? Will they (e.g. bank) possibly ask me to sign any paper?

6

the might ask for something like a letter or intent or the selling price… just don’t sign anything that commits you to anything.

7

Never had a buyers bank ask me for anything, the banks contract is with the buyer not you.


Fill this out if you’re selling below market value and the DMV might be asking the buyer questions. Otherwise a standard bill of sale is fine.

8

Hey guys,

Just an update: I’ve sold my Legacy and now a proud owner of a 2010 Outback.

Everything went smoothly with the sale. Long story short, on the day of sale, we met at the credit union that the buyer was getting the loan from. The buyer was already pre-approved and all they need to do was to see the signed bill of sale and the title (Not signed yet. I’m just being extra cautious here.).

Once they closed the loan process, the credit union printed the certified check with the names of all involved (both buyer and seller). We both sign the check and therefore it’s ready to be cashed by me.

Once I got the check, we proceeded to sign the back at the title to finalize the transfer and I handed over the keys over to the buyer. We both keep a copy of the signed Bill of Sale. Job done.

9

Doing it at the credit union or bank is a great plan when dealing with checks. Seeing the bank cut the checks removes any doubt that it might be a fake.

10

Glad it worked out. I used credit unions for a couple loans. Hard to beat their rates.