Checking a Car for Liens and Unpaid Loans

A lien is a legal claim against a car by a lender who financed it. If you buy a car that still carries a lien, the lender can pursue the car for the unpaid debt, even though you paid the seller. Checking for liens before money changes hands protects you from that.

How a lien works

When a car is bought on finance, the lender records an interest in it. Until the loan is paid, the lender holds a claim. A clear title is issued only once the debt is settled and the lien released. A seller with an open loan does not fully own the car yet.

How to check

• Read the title. A lienholder is usually named on the title. A title that names a bank or finance company is a flag.
• Run a lien or title search. Many regions offer an official record of registered interests against a VIN.
• Match names. The seller's name should match the owner on the title, with no outstanding lienholder.

Buying safely

• Never pay in full before the lien is released and the clear title is in hand.
• Where a loan is still open, arrange for payment to go to the lender first, with the balance to the seller, so the lien is cleared as part of the sale.
• Get the release in writing.

The simple rule

No clear title, no purchase. A lien follows the car, not the seller, so confirm the car is free of claims before you commit any money.