Vehicle History Report
Buyer Tips Used Cars

How Safe is it to Buy a Car with Lien on it?

By Daisy Emah-Emah Posted: 08/16/2021

Buying a used car is an excellent option if you don’t want to break the bank; especially with the great deals used car wholesale auctions offer.  


But wait a sec, and take a deep breath! 


In your excitement to land awesome deals, you need to research the important facts about the car. Pay close attention to the fine prints… in this case, the additional information provided with every car listing. You’re trying to get a good deal, not end up with a lemon. Worse yet, a car that could potentially end up costing you more due to unresolved issues from the previous owner



Some red flags are obvious while some may not be noticed at first glance; until you look really close. For example, vehicles with an outstanding lien. 


What is a Lien?

This is simply a claim on a property to ensure that the debt is paid. If the previous owner’s car purchase was financed by a financial institution, like a bank, they file a lien with the state on your vehicle. 


This gives your car purchase financier the legal power to repossess the vehicle if you default on your loan payment. But if the full payment is made, the vehicle is released fully to you. 


In this case of auctions, a vehicle that was repossessed or with an unsatisfied lien may be offered for sale often by the financier, looking to recoup some money or even the seller to settle outstanding payments.


Buying a Vehicle with a Lien

An auto lien gives the lienholder the right to take possession of the vehicle until the loan is fully paid. If there is a lien placed on the vehicle’s title, it means that there is an outstanding loan payment on the vehicle. 


As a buyer, if you purchase a vehicle with a lien on it, the vehicle has a possibility of repossession even though you didn’t pay with a loan. 

the car keys are on the money

It is impossible to legally transfer ownership or insure the vehicle with an active lien on the vehicle. If purchasing for export, a vehicle with a lien cannot be shipped outside of the USA until the loan is paid. 


After the loan is paid, the seller has to receive the vehicle’s title from the lienholder. This will help with transfer car ownership to the buyer. Without the signed title, you cannot register the vehicle under your name. The record also has to be changed with the state DMV before the vehicle can be transported to another state or out of the USA. 


Further Reading

  1. 5 Sites you Need to Check Before Buying a Used Car 
  2. What Should I Check For When Buying a Car
  3. Everything You Need to Know about Buying Used Cars
  4. How to Get the Best Vehicle History Report on Auction Cars for Sale 


What to do to Avoid Buying a Vehicle With a Lien

Before buying a used vehicle from an auction, you need to pay attention to the vehicle’s documents and make sure there is no lien. Run a vehicle history check to avoid being stuck with a vehicle without a title. 


The vehicle history report provides the lien history, odometer reading as well as major damages and repairs. You can check your state’s DMV sites or sites like AutoCheck and Carfax to run a Vehicle Identification Number (VIN) check. 


Used car auctions are a good way to save money, and you can have access to dealer-only auctions with Auto Auction Mall. Our car listing will show if the vehicle has a lien and our Auction Specialists are available to assist you. Register for free to have access to our inventory of over 150k vehicles. 


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