Buying a car from a friend that still has a lean on it.

[Ikith]

I am in the market for a car and I've decided to buy a car from a friend, the only issue is he still has an outstanding loan on the car so he personally does not have the title, the bank that has the loan does. The current plan is for me to pay him the loan money and then for him to turn around and pay the bank and sign the title over to me when he gets it from the bank but at the time I will have possession and be using the car.

Now here are my questions:

Am I still able to insure the car even though it is not in my name and that person is not on my policy or is it generally against insurance companies policy to do this?

How long does it usually take to get a title from a bank?

[Souj]

The correct and only answer is don't.

unless of course you want this deal to end in a horrible mess and destroy your friendship.

[Ikith]

The correct and only answer is don't.

unless of course you want this deal to end in a horrible mess and destroy your friendship.

See as the night progressed last night and I thought about it I was both excited and nervous for the same reasons. Maybe there is some sort of written contract or something simple that I can write up to make this transaction go smoothly?

Or some way I can possibly get involved with the bank themselves to make sure I get the title in a timely manner or transfer the loan to my name and pay it off that way?

Fuck I don't know.

[Fitch.]

I wouldn't do it, to be honest. But if you must, I'd say get it written in writing. Cpver your tracks, and make sure if you do decide to do this, that you cover every avenue so your friend has no crawl space to somehow screw you over.

[Ikith]

I wouldn't do it, to be honest. But if you must, I'd say get it written in writing. Cpver your tracks, and make sure if you do decide to do this, that you cover every avenue so your friend has no crawl space to somehow screw you over.

Okay so if I were to put everything in writing I would probably do it like this:
I, (Name) am buying a (Car) from (Friends name) for (Amount) that currently has a loan against it, this contract states that as soon as the loan is paid off (Within four business days of the bank) and the title is received that it shall be transferred to (name) from (friends name)

Signature and date below

Or does it need to be more specific than that to hold any water?

Edit: Actually this looks like its a pretty typical transaction, basically I have my bank make out a cheque to his bank for the outsanding lien and then I pay him the difference in the sale and then we contact his bank that has the lien against the car and have them send that to my bank instead of him, I then possess the title but it still has to be signed over to me by him, both banks know whats going on and I will in the end have the car and title in my possession with him just needing to sign the title over to me when I receive it.

[Acevalefor]

Get a bill of sale off the internet. Fill in all the info and have your friend sign it. take that bill of sale to the bank with your friend and give them the money to pay the loan off so they will release their interest in the vehicle. If there is anything left, give it to your friend with a handshake and drive off in your new car. Your title will arrive in the mail within a few days. Then you can take care of insurance, registration, etc.

[Takedown3]

go to the bank with the dude pay him and watch him pay the bank otherwise you could get boned

[Arauge]

go to the bank with the dude pay him and watch him pay the bank otherwise you could get boned

this, basically. i bought a car in a similar situation, go with your friend to the bank, give him the money and watch him pay it off, generally its better and quicker to do this with one of the private bankers, rather than a teller at the counter. once the loan is finalized they will give you a release-of-lien form that you can take to your local secretary of state to order a free and clear title. once that's done you just pay the fee to title/register it in your name and you're all good.

[Ikith]

This brings us to another problem, the bank is over in Yakima, so we will be talking to the bank over the phone and having the money wired, I need to wait until they open to give them a shout to see what my next step is.

[Haruk]

I've read about people being able to just pay the bank directly and having the bank send the title right to you... probably would make things a lot less complicated

[Ikith]

I've read about people being able to just pay the bank directly and having the bank send the title right to you... probably would make things a lot less complicated

This is what I will be looking into.

[Arauge]

the bank doesn't actually have your title though, they have a lien on the title. you need the release of lien paperwork to file with the secretary of state to have that part of your title cleared so that it shows you own the car free and clear.

[Ikith]

the bank doesn't actually have your title though, they have a lien on the title. you need the release of lien paperwork to file with the secretary of state to have that part of your title cleared so that it shows you own the car free and clear.

I would figure after paying his bank directly I would get that mailed to me and I would have to have him sign said paperwork and submit it myself or something along those lines?

[Byrd]

I've read about people being able to just pay the bank directly and having the bank send the title right to you... probably would make things a lot less complicated

This is the right answer.

If at all possible, take him out of the loop completely. Both of you go to the bank and see if you can transfer the loan from his name to yours. He's selling you the car, there's no reason for him to be still involved. The only reason I can see him needing to be involved is if your credit sucks and you can't get approved by the bank. Otherwise, he's an unnecessary link in the chain, and there's lots of ways for shit to go south. If he fails to pay the bank the money you've paid him, the car can be seized and you're screwed. Or if he gets into debt trouble somewhere else, the car has a possibility of being considered a seize-able asset.

That's really the best solution for all parties. He doesn't have to deal with the extra work every month, nor does he have to stress if you have cash problems and can't make the payment. You don't have to deal with an extra middle man who is being depended on each month to handle a bunch of extra cash who no longer has a vested interest in the situation, and the bank doesn't have to worry about two people successfully making a payment instead of just one.

EDIT: Whoops, missed the edit in your post a couple of hours ago, looks like that's what you're already doing.

[Ksandra]

If he fails to pay the bank the money you've paid him, the car can be seized and you're screwed. Or if he gets into debt trouble somewhere else, the car has a possibility of being considered a seize-able asset.

qft to make sure you understand this.

go to the bank, if for w/e reason they can't put the lease in your name and take his out, then don't go through with it. If you give him the money and he doesn't pay the car payment they could repossess the car and you're screwed no matter what kind of "bill of sale" you have.

[Brill Weave]

Do NOT buy your friend's car. He's going to fuck you over in the long run. Gotta question if the guy is as good a friend as you think it is with him trying to sell you a repo waiting to happen.

[Ikith]

Do NOT buy your friend's car. He's going to fuck you over in the long run. Gotta question if the guy is as good a friend as you think it is with him trying to sell you a repo waiting to happen.

Read the thread:

TL;DR: I talked to his bank, I am going to wire the money to the loan account and pay it off therefore no lien on the car, then the bank is going to give us an electronic title transfer for us to do, after that when the title is sent out it goes to me not him and is in my name. He then gets the difference.

[Plow]

I'm sorry but this is driving me completely nuts... It's lien.

Also, yeah, this isn't abnormal at all, working it out with the bank like that was the right thing to do. They do it all the time.

[Kellanved]

Read the thread:

TL;DR: I talked to his bank, I am going to wire the money to the loan account and pay it off therefore no lien on the car, then the bank is going to give us an electronic title transfer for us to do, after that when the title is sent out it goes to me not him and is in my name. He then gets the difference.

The ideal solution is the simultaneous exchange of the security interest, the car, and the money. An escrow or trustee for the transaction will be necessary; the bank is a likely candidate.

The funds should be paid to the bank in trust. The seller then authorizes transfer of the title to buyer. Once the bank has the authorization, it will terminate its lien and file the termination statement and the transfer authorization with the DMV. The bank can then disburse the funds from the trust account to the loan account (any difference going to seller). Ideally the terms of the trust will be in writing.

(Of course, parties may be willing to assume more risk)

[Brill Weave]

Read the thread:

TL;DR: I talked to his bank, I am going to wire the money to the loan account and pay it off therefore no lien on the car, then the bank is going to give us an electronic title transfer for us to do, after that when the title is sent out it goes to me not him and is in my name. He then gets the difference.

Thanks for the cliff notes version. Is this guy really that hard up for loot?