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I am looking to buy a used car from an owner in Arkansas, and I am very nervous. How does this transaction happen step by step? I met with the car owner, tested the car, took it to a mechanic, ordered a CARFAX report for $20 online etc.

Do I give cash to the owner, and get the keys? Or do we go to a DMV, and do the paperwork, and then the cash? How does the transaction go? I could not find any good articles covering the money transfer and the paperwork.

I want to make sure the car belongs to me officially, and all paperwork is okay. What if the previous owner did not pay property taxes, or did not assess the car in time, or there is an outstanding lien? Does this make the future owner responsible? What and how should I verify before the transaction takes place?

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The answer varies based on your location which you did not mention, but here in Minnesota (USA) I would recommend the following:

  • Obtain and inspect the certificate of title to make sure that you are receiving a clear title to the motor vehicle(if the sellers does not have a title they must request a new one before I would proceed).
  • Obtain a signed lien release card or notarized lien release form for all secured parties (lien holders).
  • Secure either cash or a cashiers check for the total amount necessary to complete the sale(The seller may want to be present for the printing of the cashiers check)
  • Exchange the payment and keys at the local deputy registrars office.
  • Transfer the ownership of a motor vehicle at the local deputy registrar office while in the presence of the seller.

I have followed the above steps with success and my states Attorney Generals office also recommended a similar process.

See the following question for Q&A related to the other side of the transaction: What is the best way to accept payment when selling a used car?

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    One disadvantage of this approach, if using cash, is that the buyer has to carry a substantial amount of cash from the bank to the registrar, and the seller has to carry it back to their bank. This creates some risk of robbery, in particular by the other party if they are dishonest. Another approach is to exchange the money and title at a bank. – Nate Eldredge Aug 26 '15 at 5:14
  • @NateEldredge Yes that is true but that process leaves the possibility that ownership will not properly be transferred at the DMV which is very important in my state. – dpollitt Aug 26 '15 at 12:09
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Your over-thinking this. As long as the owner has the title and the vehicle is titled in there name they can sign it over to you then you can take it to the DMV and put it in your name.

If they do not own the vehicle because they are still making payments then you will also need the signature from their bank or lien holder.

You can ask to see their ID to verify they are the owner marked on the title.

I've bought ~10 vehicles in the last 5 years and never had a problem doing it this way, my experiences have all been in California.

  • from what I understand lien holders actually markup or annotate the title in someway to alert their claim/presence or something to that effect. I always wondered what that looked like. – jxramos Sep 14 at 19:24

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