Risks associated with car liens

From: Financial Consumer Agency of Canada

What is a lien

When you buy a used car from a dealer or from a private seller, be aware that there could be a lien registered against it. Along with cars, this also applies to other used vehicles such as boats or motor homes.

A lien is a lender’s claim for repayment that is registered against a car. Lenders and garages have the right to place a lien on your car.

Liens stay registered on the car until the debt has been paid in full and the lien has been removed.

A car can have more than one lien on it.

Why you should check for liens

Before you buy a used car in a private sale or through a dealer, check that there isn’t a lien on the car.

Registered car dealers are legally required to make sure liens are removed from used cars.

It’s important to check for liens if you’re purchasing a used car through a private sale. If you find that there is a lien, it must be removed before you can register the car with your province or territory.

Find out how to remove a lien.

Checking for a lien on a car in your province or territory

You can search for a lien on a used car online through provincial or territorial personal property security searches. You’ll need the vehicle identification number (VIN) to search for liens. You may be charged a fee to use these services.

Check for a lien on a used car in:

A car can be registered in more than one province or territory.

You can also check for a lien by:

  • requesting information about liens from the seller
  • purchasing a vehicle history report which includes a detailed lien search (across all provinces and territories) from a reputable provider

Vehicle history reports reveal important information about a car’s history. These may include information on accidents, damage incidents, open recalls, service history, registration status and liens. There may be other information about a vehicle that has not been reported to the provider you decide to use. Before you buy a used car, make sure to also take a thorough test drive. You should also have the vehicle inspected by a qualified mechanic or auto technician to make sure the vehicle is functioning properly.

For a private sale in some provinces and territories, the seller is required to provide information about existing liens to buyers before ownership of the car can be transferred to the buyer.

Even if this is the case, it’s a good idea to check for a lien yourself. Search for reputable Canada vehicle data sources providers that offer history reports and compare their offerings. Reports offered by well-known providers may be more expensive. However, these reports may contain more records on the vehicle you’re looking to purchase. You may also compare consumer reviews to make the best choice for your needs.

How to remove a lien before buying a car in a private sale

If the car that you’re interested in buying has a lien on it, make sure the lien is removed before buying the car.

As a buyer in a private sale there are a few things you can do:

  • find the car’s owner and lender’s contact information through your provincial or territorial lien search or through a vehicle history report from a reputable provider to:
    • request that the current car owner pays off the money owed and removes the lien before you buy the car
    • get proof in writing from the lender that the car’s owner has paid off the money owed and that the lien has been removed

Making a complaint about a registered dealer

Registered car dealers must provide you with a full vehicle history. If you have a complaint about a car you’ve purchased from a dealer, contact either:

Car sales regulators:

Or your provincial or territorial consumer affairs office.

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