What should I do if the used car I want to buy/sell still has a lien on it?

A lien is a form of security interest that is put on a piece of property as an assurance that a particular debt will be paid

. In the context of automobile sales, a lien refers to the car itself, which is used as a security to ensure that the payment for the car loan will be made in full. A lien will not be released until the car has been fully paid by its owner to the bank who issued the loan. In this state, a car is said to be having a lien.

Ideally, you should buy only those used cars whose liens are fully paid and are free from any other financial obligations. However, there are just those instances where it simply cannot be helped. Thus, it is important to know what to do if such an issue should arise.

If You're About to Buy a Used Car

Ask the previous owner about the details of the lien. Typically, a used car seller is very much willing to discuss the details of the lien that is associated with the car he's selling. Discuss with the seller if he or she can settle all his or her debt before finally selling the car to you.

However, there are cases where the used car seller does not wish to cooperate by consciously refusing to mention the existence of such a financial obligation. While it is true that he may have morally valid reasons for doing so, legally, this is just plain wrong. You can check a used car's lien information by taking a look at the used car's UVIP, where lien information is always included, if there's any.

The lien information should include the name and municipality of the debtor. The full street address of the debtor will be stated if it happens to be a business establishment. It will also include the name and address of the lending institution, the place where the debt is registered and the amount of debt owed.

Note, however, that the UVIP is not totally accurate in listing down all liens because it is often a few days late in publication. This means that newly incurred debts may not be listed right away, so that they may be beyond the scope of your radar. Thus, it is a good practice to request a brand new UVIP from the Ministry of Transportation should you finally decide to purchase a used car, just to be on the safe side.

Now, suppose that a used car that you really want to buy actually has a lien. A lien may be transferred to you, the buyer, by contacting the appropriate government office. For Ontario, the right persons to call will be from the Ministry of Government Services after that, you can speak with the buyer with regard how much you would pay him, taking into account the extra costs that will be incurred because you would now have to continue paying off his debt.

If You've Already Bought a Used Car

If you've bought a used car and you then discovered that it actually has a lien on it, speak first with the car's seller to verify if the lien has already paid. If contacting the seller is impossible, you can also contact the lending company and inquire about it. If the debt is not yet repaid, you may not do anything about it under usual circumstances. Hence, it is better to take things in stride when purchasing a used car, and avoid being caught up by the spur of the moment.

What should I do if the used car I want to buy/sell still has a lien on it?

By: Jim Baz

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