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Selling a car with lien sale paperwork

For most consumers, purchasing a vehicle without a vehicle’s title can cause a lot of anxiety and apprehension. The preferred process for the average new buyer is having a title to transfer ownership of a vehicle. The California DMV allows for the ownership to be transferred in a few different ways other than a title. One of those ways is lien sale paperwork.

If you are trying to sell a car that has lien sale paperwork it’s important to understand your paperwork so that when objections occur while you’re selling the car you will know how to handle them and give yourself a greater chance of selling a car.

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What is a lien sale?

A lien sale happens when a mechanic, body shop, self-storage facility, or tow yard sells the vehicle to recover unpaid service fees, storage fees, tow fees, or repair fees. Additionally, an individual can process a lien privately in situations where the vehicle was abandoned. A vehicle that is being sold with lien sale paperwork went through this process and allows the “lien holder” (the person or entity that conducted the lien sale) to legally sell your vehicle to recover its costs. A lien holder has a legal claim to sell the car.

Additional lien sale information:

Vehicles that have gone through a legal lien sale do not have to be concerned with the following:

  • A Loan balance

  • Payoff amount (payoff balance)

  • Outstanding balance

  • Escrow accounts

  • Lien release

  • Loan contract

  • Car title

  • A pending car loan

Pros of a car with lien sale paperwork:

  • There is usually isn’t a car dealership involved or concerns with “negative equity” to be concerned with.

  • Usually, these types of sales are done by a private buyer.

  • There usually isn’t a down payment or concerns about a new car loan. It’s the buyer’s money that usually finalizes the sale.

  • As the buyer of a car with a lien on it the vehicle is usually sold under Kelley blue book value and you can get it for less money than you would if you had to buy the vehicle through an auto dealership.

  • The buyer pays for all of the registration fees and taxes for the new car title.

  • Usually, the buyer paid far less money than the market value of the vehicle, and can therefore make more money when they sell a car.

pros of a car with lien sale paperwork

Cons of a car with lien sale paperwork:

  • As the seller, the pool of potential buyers becomes smaller because many buyers are dissuaded because there is no title available.

  • A local lender will not issue a loan for a vehicle with lien sale paperwork. Again, the pool of potential buyers is smaller because of this.

  • There is almost never a scenario where a brand new vehicle is sold with lien sale paperwork in hand – therefore, most vehicles that are being sold with lien sale paperwork are older vehicles.

  • There is a potential for a vehicle to owe money from a remaining balance of unpaid registration fees.

Cons of a car with lien sale paperwork

What to provide the buyer with lien sale paperwork.

As the seller of a car with lien sale paperwork you must provide the following:

  • The Reg 168A

  • The bill of sale from the lien holder (individual or entity) to the new car buyer

  • Certificate of mailing and certified mail receipts

  • Vehicle Report

The selling process for a car with lien sale paperwork

The sale and title transfer of a vehicle with lien sale paperwork are very straightforward. The transaction itself needs to occur at the DMV – registration services are NOT authorized to process these transfers through the BPA (business partner automation) program:

  • It starts with the buyer taking the paperwork over to the Department of Motor Vehicles, aka the DMV

  • Pay the fees

  • The buyer will get a new registration, a new set of plates, and a new title.

  • The seller who sells the car must give the new buyer a bill of sale and issue a release of liability.

Pro-tips for Selling a Car

Here are my top 5 pro tips to have a better selling experience:

  • Calculate the fees for the buyer prior to them coming to check the vehicle out – this simple calculation can be done on the DMV’s website or you may contact registration services like Quick Auto Tags to price it for you. By doing this you will ensure that the buyer is fully aware of what they will be paying – no surprises.

  • As the seller, you are the responsible party to provide a valid smog certificate over to the new buyer, so make the process easy for them and have it handy.

  • Make sure that you have a bill of sale from yourself to the new buyer in addition to the documents that have been mentioned previously. You may click here if you need a bill of sale

  • Any time you are selling a car always file for notice of release of liability – you may click here to file one.

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