How can I verify whether a car is on loan?
I want to make sure the next used car I buy is free and clear of any prior loans.
“This is an excellent question, particularly if you are looking to buy your car in a private sale.
First, you should ask for all paperwork related to the vehicle. At minimum, this should include a copy of the title and the registration. The title will say whether there are any liens on the vehicle, which are like legal bookmarks that enable a lender to repossess a car if the borrower stops paying on their auto loan.
Second, go online to the state DMV website and look for a “VIN check” feature. You will need the vehicle identification number (VIN), which you can get either from the title or a metal tag that is on the dashboard on the driver’s side. (Pro tip: wherever you get the VIN, take a picture of it with your phone so you don’t risk missing one of the 17 alphanumeric characters.)
If your state DMV doesn’t have this function on their website, you can go to your local DMV office and check the VIN there. This process will alert you to any liens on the vehicle.
Third, if you find that there is an active lien on the car, the seller must pay off the loan and obtain a release from the lender, confirming that the lender no longer needs a claim on the car since the loan has been paid. Even if the seller shows you the lien release, which the lender sends to the borrower and the DMV, if the DMV has not yet updated the title and removed the lien, the vehicle should not be considered free and clear.
If the DMV is experiencing delays or has simply made the mistake by not updating the title, the seller can address this problem by going to the DMV office with proof of their lien release.
Caution is important in a private sale. If the seller hesitates to show you documents or confirm that they have resolved their lien with the lender, don’t buy the car. Likewise, if you don’t see a title or if you notice that the VIN plate on the dashboard is either missing or illegible, that too is a red flag.
Finding out about a lien after the fact is gut wrenching, since you are the owner of the car and you become responsible for the outstanding loan balance. “
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Read advice from car experts at Jerry
Browse by topics
What others are asking
Is it smarter to pay off your car loan over the term or pay part of it off with a lump sum?
"I recently won some money at the casino and I want to do something fruitful with it. I was thinking about putting a large amount of it to pay down my car loan, but I don't want it to affect my credit. Is it smart to pay off a portion of your car loan with a lump sum payment?"
Jun 16, 2021
Do I have to disclose my Allstate insurance if I'm in an accident and prefer to pay the other driver out of pocket?
The damage to the other driver's car is pretty minor. I'd prefer to pay cash and avoid a hike in my insurance rate.
May 24, 2021
If I make $75,000 a year, how much should I spend on a car loan?
What should I spend on a car loan so I don't overspend or stretch my funds too far? I'm in the market for a new or used car and I make about $75,000 per year.
Jul 13, 2021