One of the potential problems in buying a pre-owned car is the possibility that the automobile still has liens or encumbrances, which mean the seller hasn’t fully paid his car loan or financing with the bank. While some sellers will advertise their cars as “buyer assumes balance,” some do not advertise it as such. There’s nothing more worrying than discovering that the car you just acquired still has a bank lien.
Before you can have a car’s title transferred to your own name, it should be clear of any liens or encumbrances. Sometimes, though, you might have possessed a car for so long, but forgotten to clear any financing concerns with the bank.
Here are ways on how you can check for bank liens on a used car.
- Find the car’s Vehicle Identification Number or VIN. This is usually located on the car’s driver’s side “B” pillar, which is the pillar where the front door latches to the car’s body. The VIN is a long number, usually 17 digits for newer cars. It is a serial number that is unique to each and every vehicle sold in the US.
- Make a note of the description and specifications of the vehicle. Include the make, model, year made, color, engine displacement, and the like.
- Visit your state’s DMV website. These usually have a basic search functionality, in which you can find records for the car you are interested in. However, this might be limited to basic registration information, like last registered date, and if there are any flags or alarms against the car.
- Check online resources for a history of the car you are interested in. Websites like CarFax.com, and CheckMyCar.com offer such services. For a small fee, you can check the vehicle’s history, such as insurance or accident claims, financing problems, and the like. The website will usually flag the car if it is identified as having liens or if it was reported as a total loss by the insurance company. If the latter is the case, avoid buying the car, because it might have been in a major accident, or it might have been flooded.
- Call your local DMV, if they can help you check whether the car you are interested in has liens.
To be sure that a used car no longer has a bank lien or loan, you can request a letter from the bank or financing institution stating this fact. Ask for a lien satisfaction letter. If the bank loan has been fully paid, but there is still a lien, ask for a loan satisfaction letter first, so you can have the lien lifted.
Choosing a used car to buy can be an enjoyable experience, and you will usually learn a lot from doing your research on the history of vehicles and their owners. The important thing here is to acquire a car with clean documentation and papers, so you don’t run into trouble in the future. You should also look for used cars from reputable sellers or dealers, so you get good value for your money.