What is a lien?
When youre shopping for a used car, its important that you check the vehicle for an outstanding lien. Statistically, its pretty common for a car to have a lien  over 40 per cent of vehicles searched by CARFAX Canada have a lien registered against them  and if you dont know about a lien before you buy, you could be on the hook for the consequences. In order to help you make an informed decision when buying a used car, weve outlined what a lien actually is and why it should matter to you. A car lien is an interest in the car that the owner grants to another party (such as a bank, financial institution, or other party), usually as security or collateral for a debt, until such debt has been discharged. As an example, if you own a vehicle and you finance all or some of that vehicle with a bank, your vehicle will likely have a lien registered against it by the bank. The vehicle is the banks security that you will pay back the money they loaned you. If you dont pay it back, they could repossess the vehicle. As a used car buyer, you may be responsible for any unpaid debt (the amount of the lien) registered against a used vehicle that you buy. If you find out that the lien was not paid off on a car you now own, then the secured party may be able to repossess the car from you. That is why it is critical to know whether there are any liens registered against the vehicle you are purchasing  information that CARFAX Canada can help you determine. Checking for a car lien  The first step to clearing up a car lien is discovering it. While a dealership is legally required to clear off existing liens before selling a used car, you have to be more careful when buying or selling cars privately. A CARFAX Canada Vehicle History Report + Lien Check report will search for liens in every province or territory in Canada, as long as the vehicle is currently registered and/or has been registered in the past, the report will show its history. If youre interested in a used car and discover it has a lien, it doesnt mean you shouldnt close the deal, it just means an extra step in the process  clearing the lien before you buy. Removing an existing car lien  CARFAX Canada can provide important information needed to help get a car lien removed. This includes the name and address of the debtor (individual or a business), the lenders contact information, registering agent and collateral classification. To clear the lien, the vehicle owner must first pay off the money owed on the car. The lender will provide a document stating that the lien has been discharged. Then, the record must be changed by the provincial body that governs transportation in your province  give them a call and theyll walk you through the steps. As a buyer, you want documentation that the lien is closed/discharged and that the there is no longer an interest on that vehicle; this is something the secured party can provide the seller. Buying a car with the peace of mind that it is lien-free, removes a lot of the stress and uncertainty from the car buying process. This article was provided by CARFAX Canada; the countrys definitive source of automotive information, delivering vehicle history and valuation.