Page 1 of 2 1 2 LastLast
Results 1 to 10 of 16
  1. #1
    Join Date
    Dec 2015
    Posts
    14

    Cool How to Put a Lien on a Vehicle That I'm Selling

    My question involves vehicle registration or title in the state of: NJ

    The buyer will be making payments. I would like to be able to hold the title, but he needs the title to tag it and get insurance. So what is the best way to protect myself in case he defaults?

    Promissory note and a lien?

  2. #2
    Join Date
    Jan 2006
    Posts
    38,728

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    All a lien does, or is intended to do, is prevent the debtor from selling the security for the contract. The contract is what actually makes the vehicle the security interest for the debt. You would need to include a right to repossess in the case of a breach in order to be able to repossess in the case of a breach.

    You should also make the terms of the loan repayment very clear and specific.

    You also need to realize that if you do repossess the vehicle you are required by law to perform certain acts such as selling the vehicle according to the laws in place and only then being able to seek damages (the remaining balance of the loan). If you wish to retain the vehicle it will require a contract written specifically to allow for that with specific allowances regarding the financial concerns of the buyer. Generally speaking you can't simply repo a vehicle and keep it without considering the equity the buyer may have in the vehicle.

    Believe it or not, there is a huge difference between loaning a buyer the money to purchase your vehicle (a promissory note would be this sort of agreement) and a loan contract where you retain rights to repo and possibly retain the vehicle after the repossession. A promissory note will generally only allow you to sue for the balance owed while a loan contract can allow many other actions in the case of a default.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Quote Quoting 0099469154
    View Post
    So what is the best way to protect myself in case he defaults?
    Have him get the loan from somebody else, and owe them the money.

  4. #4
    Join Date
    Mar 2013
    Posts
    17,135

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Quote Quoting 0099469154
    View Post
    So what is the best way to protect myself in case he defaults?
    As a practical matter there is only one way to protect yourself in case he defaults and that's not to do this in the first place.

    Understand that no matter how strong your contract is and no matter what you put in it, nothing prevents the default, the loss of the money and the loss of the car.

    WARNING:

    This person wants to make payments to you because he/she cannot qualify for a loan at a bank and doesn't have the cash to pay in full.

    This is an incredibly lousy credit risk and you are not smarter than the bank that won't lend this person the money.

    So many car payment agreements that went down the tubes started the way yours is starting.

  5. #5
    Join Date
    Dec 2015
    Posts
    14

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Since 2/3 comments were in regards to 'default risk' let me explain the key difference in this scenario. The buyer's earnings, made possible by the vehicle itself, is linked to a third party company by which the first 'waterfall payment' is my loan payment. The contract will require this feature as well as a documents page (insurance with certain liability and collision minimums).

    The vehicle will come pre-installed with a starter interrupt kit that will track the vehicle's movements. It can also be activated at any time (issues with insurance/license/late payment). It is not 100% tamper-proof.

    Payment risk: buyers will go through a background screening (repossessions/bankruptcy/credit/accidents).

    Quote Quoting jk
    View Post
    A promissory note will generally only allow you to sue for the balance owed while a loan contract can allow many other actions in the case of a default.
    I will consult an attorney, but I thought a promissory note can include the right to repo. Which is better (promissory note vs. loan) if I want to repo and keep the vehicle in the event of non-payment?
    http://nationalparalegal.edu/documen...leCar/Main.asp

  6. #6
    Join Date
    Jan 2006
    Posts
    38,728

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    You're ability to shut down the car is a HUGE liability risk for you especially since your intent is to transfer title with the sale. It is no longer your vehicle so you expressing such control is legally dicey at best. If the lack of ability to start the car should cause some serious issue (example; driver is not able to start the vehicle to take wife to hospital to deliver their child and the delay caused injury to the wife or child) you will bear some liability. God forbid it malfunctions and leaves the guy stranded in a dangerous part of town and he is beaten or killed. Not something I would want to risk.


    You now speak of involving a third party. That exponentially increases problematic issues for you. I don't see how a waterfall payment is involved in your situation. You have described nothing that could involve such a function but basically it means there are other creditors involved. Who is the superior creditor and the junior creditor? How does it improve your situation?

    A promissory note is simply a promise to pay. A security interest agreement is a seperate issue.

  7. #7
    Join Date
    Dec 2015
    Posts
    14

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Regarding the liability risk of a starter interrupt kits; these kits have been installed in more than 2 million cars in the US. Under a different analogy, if a man failed to make payments on his house, was foreclosed upon, and died while sleeping in a snowstorm outside the home, I doubt the bank would be held liable for his misfortune. http://www.forbes.com/sites/kashmirh...rrupt-devices/

    Third party? An automatic payment mechanism that guarantees I'm paid first from his weekly earnings (which requires the use of the vehicle) lowers his default risk and increases probability or re-payment.

    Isn't this promissory note a secured debt (vehicle as collateral)? Or are promissory notes limited to only un-secured agreements?

  8. #8
    Join Date
    Jan 2006
    Posts
    38,728

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Hey, it's your home, savings, and anything else at risk. You do whatever you are comfortable with.


    Your comparison with a foreclosure is nowhere similar. With the car you are speaking of conditions that can change in an instant and the device being activated without notice and the ability to cure the condition before the action is taken.

    Your payment from the employer is not a waterfall payment scheme. On top of that, the buyer can discontinue the payment scheme if he wishes since it is not a court order mandating it. On top of that if the buyer doesn't earn enough, it can prevent the employer from making the deduction. Of course if the buyer gets fired or quits any such scheme is worthless anyway.


    A promissory note is a promise to make payments as contained in the note. It is not a secured debt. If one defaults on a promissory note the holder of the note gets to sue for the enforcement of the note.

    A security interest agreement is a security interest agreement.

  9. #9
    Join Date
    Mar 2013
    Posts
    17,135

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Quote Quoting 0099469154
    View Post
    Since 2/3 comments were in regards to 'default risk' let me explain the key difference in this scenario. The buyer's earnings, made possible by the vehicle itself, is linked to a third party company by which the first 'waterfall payment' is my loan payment. The contract will require this feature as well as a documents page (insurance with certain liability and collision minimums).
    Oh, right, you're the one with the clever business idea espoused in:

    http://www.expertlaw.com/forums/show...ht=#post925745

  10. #10
    Join Date
    Jan 2006
    Posts
    38,728

    Default Re: Can I Put a Lien on a Vehicle I'm Selling

    Quote Quoting adjusterjack
    View Post
    Oh, right, you're the one with the clever business idea espoused in:

    http://www.expertlaw.com/forums/show...ht=#post925745
    oh holy cow. If I had only checked.

    1. Sponsored Links
       

Page 1 of 2 1 2 LastLast

Similar Threads

  1. Private Sales: Selling a Car With a Clean Title and an Undisclosed Out-of-State Lien
    By drivemotors in forum Consumer Law
    Replies: 1
    Last Post: 04-14-2015, 05:24 AM
  2. Fraud: Can You Be Criminally Charged for Selling a Car With a Lien
    By ignorantof thelaw in forum Criminal Charges
    Replies: 2
    Last Post: 02-28-2014, 01:43 PM
  3. Replies: 4
    Last Post: 05-13-2013, 11:41 AM
  4. Liens: Can There Legally Be a Lien Holder on My Vehicle if I Owe Nothing on the Vehicle
    By AudraH in forum Vehicle Registration and Title
    Replies: 3
    Last Post: 04-28-2011, 09:24 PM
  5. Liens: Selling Car to Son - How to Title/Lien
    By allentxdad in forum Vehicle Registration and Title
    Replies: 1
    Last Post: 11-03-2008, 05:11 PM
 
 
Sponsored Links

Legal Help, Information and Resources