Yes, you can transfer a car title with a lien, but the process is more complex than a standard sale and requires the lien to be settled first. The lienholder (the bank or lender that holds the loan) has a legal claim to the vehicle's title until the debt is paid in full. Therefore, the title cannot be legally transferred to a new owner without the lienholder's involvement. The key is coordinating with the lienholder to ensure the loan is paid off from the sale proceeds, allowing them to release the lien and provide the clear title needed for the transfer.
The most common method involves an escrow service or conducting the transaction at the lienholder's physical branch. The buyer's payment is used to directly pay off the loan balance. The lienholder then sends the signed title, often directly to the new owner or the DMV. It's critical to contact your lender first to understand their specific procedure and obtain a 10-day payoff amount, which is the exact sum needed to pay off the loan on a given date, including any per-diem interest.
Trying to bypass this, such as accepting a buyer's promise to make payments, is extremely risky for the seller. You would remain legally responsible for the loan. While some states have a "title held by bank" process, others require the seller to obtain the title first. Always check with your local Department of Motor Vehicles (DMV) for state-specific requirements. The table below outlines the core steps and potential challenges.
| Step | Action | Key Consideration |
|---|
| 1 | Contact Lienholder | Obtain the official payoff quote and precise transfer instructions. |
| 2 | Disclose the Lien to Buyer | Full transparency is legally required and builds trust. |
| 3 | Use Escrow or In-Person Payoff | Ensures funds are securely transferred to the lienholder. |
| 4 | Lienholder Releases Title | This can take several days or weeks via mail. |
| 5 | Complete Title Transfer at DMV | Both parties may need to sign the title and bill of sale. |
