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I'm interested in purchasing a car from an owner in another state. The owner currently owes money on the car and so the bank has the title. I've verified the car's service history and ownership, but wish to retain the option to cancel the sale until after I see it and test drive it in person. Next week I will be about 200 miles from the owner so it's a good time to make the purchase, but making two trips (one to see the car and one to take ownership) may not be realistic.

My first suggestion was for him to take out a short-term personal loan to pay off the car, get the title, and then we could transfer funds and ownership at the same time at an impartial third party (such as AAA). However, he cannot get approved for the personal loan taking this option off the table.

It seems like the only remaining option, other than walking away from the deal, is for me to get a notarized sales agreement, transfer the money a few days early for him to get the title, and then meet up to review the car and transfer ownership. The sales agreement could have a clause to allow me to cancel the sale upon inspection if anything is amiss.

Is the option I've proposed safe? Is there anything I need to make sure I do to insure he cannot force the sale or, worse, keep the money and the car after I transfer funds to him? Is there another, safer option?

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    Could you have the bank transfer the title to you with him as a co-signer when you're ready to buy?
    – user1731
    Commented Aug 7, 2015 at 13:13
  • I hadn't thought of that. How would that work? We talk to his bank and I wire the funds directly to them with the agreement that they will add me as a co-signer?
    – Nicholas
    Commented Aug 7, 2015 at 14:04
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    "Next week I will be about 200 miles from the owner so it's a good time to make the purchase." Huh? Oh, you mean that 200 miles is closer than you usually are. Wow. I did a bit of a double-take at that.
    – TRiG
    Commented Aug 8, 2015 at 15:25
  • @TRiG Yes, sorry, I should have been more explicit. The owner lives about 1200 miles from my home. It's a limited edition car and very hard to find, especially at a reasonable price.
    – Nicholas
    Commented Aug 10, 2015 at 12:51
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    I live in Ireland, @Nicholas. We have slightly different ideas of proximity around here.
    – TRiG
    Commented Aug 10, 2015 at 13:23

2 Answers 2

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Contact the lien holder (the bank) and they'll have a procedure for you.

Usually, you complete the transaction at the bank after agreeing on the purchase price: you will cut a check to the bank to pay off the loan, and then write a second check to the seller for whatever extra amount should go to him. The bank will handle the paperwork for transferring the title of the car to your name.

Obviously, under no circumstances should you give all the money to the seller in the hopes that he pays off the loan. You need to follow the lender's procedures because they hold the title to the car and must be the ones to transfer it to you.

Banks do this type of transaction all the time. Just call them and ask about how to proceed.

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    I called the bank. They gave me the same answer my bank did when I tried to sell my car last year: they can't help. They will accept the funds from me and release the title to the seller. They suggested that I have a bill of sale and contract for protection but took no part in that side of the equation.
    – Nicholas
    Commented Aug 10, 2015 at 13:48
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I've done this, though with a loan company rather than a bank. We agreed on price, drove to the loan company's office (the seller having notified them in advance), I gave them the money, got the title, and they gave the balance to the seller.

Important point is that you get the signed-off title from the lienholder.

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  • This is a good suggestion. Unfortunately, we'll only have one day to meet up in Florida and do this. The bank's offices are all in NY, TN, and in between, and they said it could take 2-3 days for the electronic title to be received by the local DMV.
    – Nicholas
    Commented Aug 10, 2015 at 13:49

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