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Old 02-14-2013, 09:00 AM   #1
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Buying a trailer that has a loan balance?

We are interested in buying a late model airstream and have struck a deal. Then, we found that there is a loan balance on the trailer. What is the best way to structure payment for the trailer?

Thanks.
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Old 02-14-2013, 09:19 AM   #2
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If you are paying cash, meet at the lenders office with a cashiers check for the loan balance and a cashiers check for the balance of the purchase price for the seller. Obtain title transfer documents from the lender and seller.

Just like purchasing any vehicle with a loan.

Bill

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Originally Posted by maxeystevens View Post
We are interested in buying a late model airstream and have struck a deal. Then, we found that there is a loan balance on the trailer. What is the best way to structure payment for the trailer?

Thanks.
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Old 02-15-2013, 01:11 PM   #3
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You may want to confirm they will have a competent notary there to validate signatures where required. I say competent because I have had them mess it up and it is a pain to unravel to get a proper vehicle title.
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Old 02-15-2013, 04:25 PM   #4
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Bill is correct, you need to have the seller contact the lien holder and get the pay off amount. Due to interest calculations, the amount is normally valid for a few days.

I would expect the lien holder to have the title, so they will want their part of the money to release it. You will owe the balance to the owner. I, too, would suggest completing the transaction at the lien holder's place of business if at all possible. If not, I would want to handle speak with them via telephone at the very least while in the presence of the seller.

Congrats on the trailer, have fun.

JD
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Old 02-15-2013, 05:26 PM   #5
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We purchased a used 2003 Chevy Duramax in upstate NY back in 2005 from a kid that was behind on his loan. The bank was First Niagra I believe. Anyway, considering the circumstances, I dealt directly with the bank instead of going through the actual seller. By the time I went to the local branch of the bank we agreed on, First Niagra had provided the hard copy of the title they held on the truck. I paid off the balance in a check directly to the bank, they had the seller sign the old title and immediately issued the paperwork for the state to put the title in my name for the truck. I don't know if all banks/lenders will be able to do the same thing, but it sure made it easy for me.
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Old 02-15-2013, 05:29 PM   #6
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When buying ANYthing that requires a title I will not part with the cash until the seller has a clear title. The seller can take a 30 day note from his bank pay the lien get the title properly in his name. This is a very simple process in other then large cities. The owner usually ends up paying no more then 5 days interest. If he can't afford that, goodby. He's not using my money.
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Old 02-15-2013, 05:33 PM   #7
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Sellers often don't have that much creditworthiness left, and that is why they are selling.

Getting directly involved with the bank to have the lien removed (as described in other posts above) if the best way to go.
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Old 02-15-2013, 07:52 PM   #8
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Not likely but the trailer could have more than one lien on it, deal with the bank who holds the title and have the sellers sign a paper stating that the unit has not other liens and that they are responsible for any which may arise. Example unpaid repair bill. Might have a lawyer handle the deal, all a Notary dose is make sure you are who you say you are.

Do some searching around the internet for the standard verbiage to use/

Example I found:
I do hereby grant, sell and transfer full ownership of this vehicle to the buyer. I certify that this vehicle, at the time of sale, is free from all encumbrances, taxes, fees and liens except as those specified on the Title or listed below; and that, I (Seller) will defend and be held fully responsible for such lawful claims and demands with respect to the vehicle, if any.

when I sold my boat I even found the size font you were to use and so on.

Enjoy your new trailer.

Jim
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Old 02-15-2013, 08:38 PM   #9
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As former Credit Union Legal/Fraud/COmpliance officer, I add another vote for dealing directly with lender, getting payoff amount from them, and handing them the funds for purchase, and getting lien release and title transfer docs as part of same transaction..

Giving the seller the money and "hoping they pay off the loan and send title papers" is just a little less risky than sending your Christmas wishes to Santa Claus in a letter addressed to "North Pole"... Some sellers may come through, but we were kept busy with private party buyers who were stunned and amazed when sellers just kept all the money and disappeared.. We also saw a lot of dealers keep our money and fail to produce title, and never once succeeded in prosecuting them for grand theft, which was what they'd done.. More often than not, buyer who took out loan with us for purchase was liable for loan and never received title...

Just remember that your negotiating power and legal rights diminish in dramatic fashion once cash leaves your hands into someone else's hands.. Be sure you are prepared to accept any risks you take if you let go too soon...
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Old 02-15-2013, 10:40 PM   #10
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As already stated, deal with the Bank that holds the lien. When we bought ours, the bank of the PO held 80% plus of the equity. I spoke to the lien holder directly (they had the title and confirmed the payoff in writing to me), I had my bank wire transfer the payoff to the lien holder, had my bank pay the small amount of equity to the PO, and my bank notarized all the paperwork documenting the deal. I assured the paperwork was very detailed and explicit as to how the deal was structured and how the transfer of ownership was being accomplished. I took possession of the trailer at that point. To make matters a bit more nerve racking, the deal was done in a bank in Alabama and the lien holder was in California. This is evidence that it can be done!

When I struck the agreement to buy the trailer, the PO hadn't disclosed that he owed a significant amount of money on the the trailer until we began to talk about transferring the title! As a matter of fact, quite to the contrary, he had talked about taking it to Michigan to some folks that wanted it, blah, blah, blah. I almost backed out of the deal when I discovered that he didn't own it outright and in particular when I discovered the lien holder was such a significant distance away. Meanwhile, my bank helped me manage the logistics of it all via electonic transfers of funds, documentation, etc. and it all worked out fine. We met in the bank offices, I authoized the transfer and check to the PO, and got all the paper work squared up.

By the way, I was shocked that someone would borrow that much money on a travel trailer! But they did on what now appears to be a very impulsive purchase on their part. Unfortunately the PO lost a big sum of money on the depreciation when they sold a 2 1/2 year old trailer. They were very disappointed to discover that Airstreams actually depreciate but needed to get out form under a significant monthly payment.

By the way, I didn't steal the trailer and I paid a fair price for it. I don't think I overpaid but I certainly didn't cover the PO's losses. I did feel badly for them when I finally got the deal done. They simply made a mistake by buying something they couldn't afford nor would use. In addition, they had white knuckle towing syndrome and were scared to death pulling the AS.

So, it can be done and if the deal is good, go for it.
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Old 02-16-2013, 07:53 PM   #11
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Originally Posted by Jim Clark View Post
Not likely but the trailer could have more than one lien on it, deal with the bank who holds the title and have the sellers sign a paper stating that the unit has not other liens and that they are responsible for any which may arise. Example unpaid repair bill. Might have a lawyer handle the deal, all a Notary dose is make sure you are who you say you are.

Do some searching around the internet for the standard verbiage to use/

Example I found:
I do hereby grant, sell and transfer full ownership of this vehicle to the buyer. I certify that this vehicle, at the time of sale, is free from all encumbrances, taxes, fees and liens except as those specified on the Title or listed below; and that, I (Seller) will defend and be held fully responsible for such lawful claims and demands with respect to the vehicle, if any.

when I sold my boat I even found the size font you were to use and so on.

Enjoy your new trailer.

Jim
Jim:

Thanks so much for this great information. We haven't purchased the trailer yet, but are heading to do so the first of the week. Your advice is very helpful.

Becky
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Old 02-16-2013, 08:00 PM   #12
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Our seller had an outstanding loan and had us send the money directly to the bank for the purchase and they cut him a check for the balance once the loan was paid off.

That way the bank got theirs, he got his and we got the trailer.

All worked out fine. I'm sure others might do it differently as outlined above. I worked directly with his lender (a well-established and well-respected credit union) to make sure that things were on the up and up
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Old 02-16-2013, 08:03 PM   #13
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I used to work in the finance business and then headed up the consumer loan department of a Savings & Loan Assn. I agree with others about dealing with the holder of the title. Get a payoff amount from them along with a date it is good through. Ask them if the title has any secondary liens listed on it. If it does, find out to whom and get a payoff from that institution also. The title won't be release until after the loans are paid in full. Have your bank make out a cashiers check payable to the owner's , and all lienholders. This will require all their signatures in order for the funds to be disbursed. Have your bank include instructions on where to send the title. If you are getting a loan to buy the trailer this would be to your bank, if not, have the title sent directly to you.

Have the owner sign a power of attorney authorizing you to sign the title transferring ownership to you upon your receipt of the title. Make sure all owners listed on the title sign the power of attorney and get it notarized. On this item, check with the DMV of your state to see what specifically required on the power of attorney to ensure you have full authority to sign the title transferring ownership to yourself.

To be on the absolute safe side, it might not hurt to finance the unit and handle the sale and transfer of monies, title, etc. through your lender. They will make sure the transaction is performed correctly. Just make sure it is a simple interest loan with no pre-payment penalties. This will allow you to pay it off at any time with minimal cost to you.
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Old 02-17-2013, 08:41 AM   #14
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I used to work in the finance business and then headed up the consumer loan department of a Savings & Loan Assn. I agree with others about dealing with the holder of the title. Get a payoff amount from them along with a date it is good through. Ask them if the title has any secondary liens listed on it. If it does, find out to whom and get a payoff from that institution also. The title won't be release until after the loans are paid in full. Have your bank make out a cashiers check payable to the owner's , and all lienholders. This will require all their signatures in order for the funds to be disbursed. Have your bank include instructions on where to send the title. If you are getting a loan to buy the trailer this would be to your bank, if not, have the title sent directly to you.

Have the owner sign a power of attorney authorizing you to sign the title transferring ownership to you upon your receipt of the title. Make sure all owners listed on the title sign the power of attorney and get it notarized. On this item, check with the DMV of your state to see what specifically required on the power of attorney to ensure you have full authority to sign the title transferring ownership to yourself.

To be on the absolute safe side, it might not hurt to finance the unit and handle the sale and transfer of monies, title, etc. through your lender. They will make sure the transaction is performed correctly. Just make sure it is a simple interest loan with no pre-payment penalties. This will allow you to pay it off at any time with minimal cost to you.
Thank you for this great information. We feel better now that we have some insight into the process.
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