How to check a used car for a lien before you pay

A lien means a lender, usually the bank that financed the car, has a legal claim on it until the loan is paid off. Buying a car with an unpaid lien is one of the more expensive mistakes in private sales, because the debt can follow the car rather than the seller.

Why it matters

While a loan is open, the lender is often listed on the title, and in many states the lender holds the title itself. A seller who still owes money can't hand you a clean title. If you pay them and they don't pay off the loan, you can end up with a car you can't register, or one the lender still has a claim on.

How to check

1. Look at the title. Ask to see the actual title, not a photo. A lienholder section with a lender's name in it means there's a recorded lien, unless there's a signed release.
2. Ask the seller directly. "Is there a loan on the car?" A straight answer is a good sign.
3. Check with the state. Many state motor vehicle agencies can tell you a title's status, including recorded liens. Search your state's DMV site for a title or lien check.
4. Read the history report. A vehicle history report can show loan or lien records that were reported over the car's life. Our sample report shows one for the first owner of a 2012 RAM 1500 on page 4.

Use the history report to spot that a lien existed. Confirm whether it's still open with the title, the state or the lender, because a report records history and the loan may have been paid since.

Buying a car that still has a loan

It can be done safely if the money goes to the lender first:

• Do the deal at the seller's bank or lender, or with them on the phone.
• Pay the lender the payoff amount directly, and the seller only the difference.
• Get a written lien release, and make sure the title is released to you or sent to you by the lender.
• Don't hand over the full price in cash on the promise that the seller will "pay the bank later".

Red flags

• The seller can't produce the title, or the name on it isn't theirs.
• A "lost title" story with a duplicate title issued very recently.
• Pressure to pay quickly in cash.

See a car's reported loan and title history before you meet the seller. Enter the VIN for the full Carfax report, $7.99 for one or $3.50 a report in the 20-pack.