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Should I buy a car from a private seller if it still has a loan on it?
I want to buy a sweet 2015 4Runner from a private seller, but it still has a loan on it. I've heard mixed reviews about whether buying a car with a loan on it is a good idea. Is it?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It sounds like you found a good deal on a car you want! Buying a used car with an outstanding
car loan
isn’t necessarily a bad investment, but you’ll want to figure out a few things first. Since you can’t get the title unless the loan is paid off, you should start by
finding out if the car has a lien
and who the lienholder is. This is easy to do at the DMV with the VIN.If you find a lien, the best way to complete the buying process is to ask the seller to pay off the loan. Go with the seller to the lender to make sure they pay off the loan, and the lender can transfer the title to you once the lien is clear.
In case the seller can’t pay off the lien, you can take out a loan and let your bank know it’s to cover a lien on a car. Of course, that will create a new lien on the vehicle, which might be more of a headache.
You will also need to carry full coverage car insurance. That’s when
Jerry
can help. Use the Jerry app to compare quotes from dozens of car insurance companies. By doing so, you can save hundreds of dollars each year while feeling comfortable behind the wheel.View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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