QuestionI recently went to my bank to finalize a private party auto sale with the seller. He still had a lein on the vehicle so the loan officer arranged the proper paperwork for the transaction and told the seller that the funds may take up to 5 days to reach his bank. The seller refused to give me the car until the funds were verified by his bank. I cancelled the transaction because I thought the whole purpose of using a financial institution was to make the process legitimate and legal. Was he correct in withholding the vehicle? I don't understand why I would go through all the legality of it only to have him take MY car home with him.
Answer
car guy
Hi Brett,
Sorry to hear about your problem. Here is the answer to your question as well as a couple of possible alternatives to avoid this problem in the future.
Your questions was: Was he correct in withholding the vehicle?
The short answer is unfortunately yes. There is no hard and fast rule it all boils down to the combination of fear and the exercise of the sellers own judgment based upon (probably) the horror stories he has heard or read about along with the idea that a deal is not made until it's paid. Here
Consider the following two scenarios:
Pretend for a second that you're the seller and you let the buyer take the car after you've confirmed that his financing was in place and in process. During the 5 days that takes for the money to make it to your account the buyer discovers a whole shopping list of things that he didn't notice before he bought the car. He calls you up after the third day and tells you that he would like to pay less for the car due to those issues or he would like to have you make the repairs at your own expense and if you didn't want to do that then he was going to call his bank and cancel the transaction?
The second scenario is pretty much the same except the buyer was using stolen identification to obtain a loan, you release the car to him after making sure that everything he told you so far was true as best you could. Then when the money didn't show up in your account, or even after it did, the bank discovers the fraud and demands its money back if they haven't funded the deal, refuses to pay for the car leaving you with no car and no money and more than likely no way to contact the buyer that still works.
Don't take the sellers decision to hold the car until final payment was made personally. There is so much identity fraud going on out there it would have been foolish for him to hame done it....once again not because there was anything hinky about your deal ....there are just soooo many hinky deals out there and it's very difficult to know the difference.
Here is another way to do the deal to avoid that problem:
After you found the car you wanted from a private party I would have asked the seller to call the lienholder bank (on speaker phone) so you could verify the payoff (they will usually give you a 10 day payoff or a payoff for that day plus a daily intrest charge) I would have gotten the seller to sign an authorization for payoff authorizing your bank to payoff the car directly and to send them the title immediately back to them. I would have given that information to my bank and told them the car you want to buy has a payoff ..and asked them to cut you two checks one made out to you and the bank with the title and a second check to you and the seller ....when you signed the papers they would give you the check for the seller and when you picked up the car you would sign off on the back of the check.... of course the easiest way to do it would be for the selle to meet you at your bank and credit union and and your bank could of handed him the difference check on the spot. The seller needs to know 100% that the payoff will be made by you ....your bank needs to know that they will get clear title to the car asap and will never trust the seller to take the full proceeds of the loan and make the payoff ...they will always short fund the deal and make it themselves after they have verified it at least 2x.
The other option would have been to find the car at a dealer who would have verified your loan approval, had you sign a backup contract and handed you the keys. :) Craigs list has created alot of new and sometimes unscrupulous auto dealers who operate without a bond insurance or license who engage in a practice called 'curbstoning" or "curbing' so the potential for fraud exists on both sides of the deal ...this has created an environment where the seller needs to beware just as much as the buyer
Feel free to ask any follow up questions you want I am here to answer your questions until you are completeley satisfied with the answer as well as my service
Roger
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