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Out-of-state transactions
- Thread starter Wonderious
- Start date
A bank can also act a de factor escrow service. Banks do this all the time and will walk you through the process.
Scenario A (No Liens)
1. You are financing the car purchase with your local bank or credit union.
2. The seller's car does not have a lien on it, no loans, title in hand.
3. You apply for the loan and get qualified.
4. Upon qualification, the bank will request documents from the seller (copy of title, registration, driver's license, etc).
5. The bank will run a title search on the car to verify that there are no liens on it (it's their ass on the line if there's a problem).
6. Bank will request both parties sign paperwork. This can be done together or at each party's convenience.
7. Seller signs the title to the bank.
8. Bank will issue a cashier's check to you and you hand it off to the seller.
9. Seller gives you the keys.
Scenario B (Loan or Lien on Car)
1. You are financing the car purchase with your local bank or credit union.
2. The seller's car a lien on it. Title is held at the seller's bank.
3. You apply for the loan with your bank and get qualified.
4. Upon qualification, the bank will request documents from the seller (registration, driver's license, etc).
5. Bank will also request documents from the seller's bank (Payoff amount, copy of title, etc).
6. The bank will run a title search on the car to verify that there are no additional liens on title.
7. Both banks will request signed paperwork. This can be done together or at each party's convenience.
8. Your bank will send funds to the seller's bank. They can help arrange additional funds. For example if you're buying a car for $50K, the seller owed $30K, you would need to provide an additional $20K to complete the transaction.
9. Upon receiving funds to pay off loan, seller's bank will arrange for the title to be taken care of. You would probably sign the title, but it would then go straight to your bank.
10. Seller gives you the keys.
Scenario A (No Liens)
1. You are financing the car purchase with your local bank or credit union.
2. The seller's car does not have a lien on it, no loans, title in hand.
3. You apply for the loan and get qualified.
4. Upon qualification, the bank will request documents from the seller (copy of title, registration, driver's license, etc).
5. The bank will run a title search on the car to verify that there are no liens on it (it's their ass on the line if there's a problem).
6. Bank will request both parties sign paperwork. This can be done together or at each party's convenience.
7. Seller signs the title to the bank.
8. Bank will issue a cashier's check to you and you hand it off to the seller.
9. Seller gives you the keys.
Scenario B (Loan or Lien on Car)
1. You are financing the car purchase with your local bank or credit union.
2. The seller's car a lien on it. Title is held at the seller's bank.
3. You apply for the loan with your bank and get qualified.
4. Upon qualification, the bank will request documents from the seller (registration, driver's license, etc).
5. Bank will also request documents from the seller's bank (Payoff amount, copy of title, etc).
6. The bank will run a title search on the car to verify that there are no additional liens on title.
7. Both banks will request signed paperwork. This can be done together or at each party's convenience.
8. Your bank will send funds to the seller's bank. They can help arrange additional funds. For example if you're buying a car for $50K, the seller owed $30K, you would need to provide an additional $20K to complete the transaction.
9. Upon receiving funds to pay off loan, seller's bank will arrange for the title to be taken care of. You would probably sign the title, but it would then go straight to your bank.
10. Seller gives you the keys.
You pay the lien off with one check, which will be payable to the lien holding bank and reference the lien/loan account.
The second check or cash is the remaining equity which is paid to the seller. As mentioned above, 30k lien (cashiers check payable to XYZ Bank for lien #123456). The bank if local should give you a lien release on the spot... or if the bank isn’t local, you hand that to the seller and have them overnight it to the lien holding bank. If it is an electronic title state, they’ll either send the title to the DMV with no lien, then the seller will get it and send to you (2-4 weeks most likely). Then you either title it or it goes to your bank directly and the lien is applied if you purchased with a loan.
It’s not bad, just takes time. What you should get at the time of sale is: the car, keys and a bill of sale which describes the actions and I associate the check numbers as well as that the lien will be paid off and no liens will transfer with the car sale. I also say that the seller will be liable for any late titling fees if it takes over 30 days due to delays from the seller.
I had a guy drag his feet with my truck and I ended up eating $150 in delayed registration fines. But I couldn’t title it without the lien release that only he could get from his bank. If I titled it without the lien release, his lien would have gotten applied to my title. Kind of silly.
Long answer for a pretty easy process.
PS - if you buy from a private party in CA, you don’t pay CA taxes, drive or ship it home and you’re good. If you buy from a dealer you’re stuck paying taxes in CA (unless you get grey area creative) and potentially/most likely the titling state (if applicable). Buy private party, everybody wins, minus the guys that are trying to take you to the cleaners (the dealers).
Hope that’s useful to someone, sorry again for the mild stream of consciousness.
The second check or cash is the remaining equity which is paid to the seller. As mentioned above, 30k lien (cashiers check payable to XYZ Bank for lien #123456). The bank if local should give you a lien release on the spot... or if the bank isn’t local, you hand that to the seller and have them overnight it to the lien holding bank. If it is an electronic title state, they’ll either send the title to the DMV with no lien, then the seller will get it and send to you (2-4 weeks most likely). Then you either title it or it goes to your bank directly and the lien is applied if you purchased with a loan.
It’s not bad, just takes time. What you should get at the time of sale is: the car, keys and a bill of sale which describes the actions and I associate the check numbers as well as that the lien will be paid off and no liens will transfer with the car sale. I also say that the seller will be liable for any late titling fees if it takes over 30 days due to delays from the seller.
I had a guy drag his feet with my truck and I ended up eating $150 in delayed registration fines. But I couldn’t title it without the lien release that only he could get from his bank. If I titled it without the lien release, his lien would have gotten applied to my title. Kind of silly.
Long answer for a pretty easy process.
PS - if you buy from a private party in CA, you don’t pay CA taxes, drive or ship it home and you’re good. If you buy from a dealer you’re stuck paying taxes in CA (unless you get grey area creative) and potentially/most likely the titling state (if applicable). Buy private party, everybody wins, minus the guys that are trying to take you to the cleaners (the dealers).
Hope that’s useful to someone, sorry again for the mild stream of consciousness.
I guess I’ve gotten lucky buying/selling 5 cars with leins over the past 6 years all out of state sight unseen with no complications or delays. My rule has always been that funding clears and the car is released and the title has never been an issue as I pay the extra couple bucks to overnight the title from the leinholder.
I’ll still consider paying off the lein now.
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