How do you buy a car with a lien?

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Dear Driving for Dollars,
I want to buy my friend’s car, but it has a lien on it. Can I buy it? How do I get it registered in my name?
— Rob

Dear Rob,
Many sellers offer cars for sale that have liens on them, with the intention of using the buyer’s money to pay off the lien. Talk to the lien holder to find out the total amount due to release the car and if there are any other stipulations. If you are paying cash, you can work directly with the lien holder. If you have a loan, tell the details to your lender so it can facilitate paying the lien holder, with the remainder (if there is any) going to the seller. Once the lien has been paid off, you or your lender will receive the title and you’ll be able to get the car registered in your name.

Be sure to write up a contract that addresses whatever you want to happen if you can’t pay the lien off. While it’s not required in all states, it’s a good idea to create a bill of sale that outlines the transaction. Make sure it is dated and signed by both parties so everyone has a record of the transaction.

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If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories. Follow her on Facebook here or on Twitter @SheDrives.

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