It’s unfortunate you want to sell your financed motorcycle. Anyways, I will show you how to sell a motorcycle with a lien without penalty. Selling the financed bike is not a problem, but knowing how and what to do.
Some time ago, I moved to a different part of the country not quite suitable for riding. So I paid for a track bike in cash to please my itch for corners.
Since I hadn’t any use for my financed street motorcycle, I sold it with a lien on it since I wasn’t comfortable paying off the entire amount owed on it. Paying off the whole amount with less liquid would have affected me significantly.
So, what did I do? What is the best way to sell a motorcycle that has a lien on it? Do you have to write up a contract stating that your buyer will get the title after paying off the motorcycle? Will it be notarized? Can you take the loan to the potential buyer if they are interested in the motorcycle?
Well, getting rid of a motorcycle with a lien isn’t even as difficult as you think! Let’s learn more.
Can You Sell a Motorcycle You Owe on Without Informing the Lender?
No. When you finance a motorcycle, your lender keeps the title certificate or pink slip until you pay off the loan. So, you can’t sell a motorcycle you owe on without informing your lender.
A third party or lender holding your motorcycle title is known as the lienholder. This lien also allows your lender to repossess the financed motorcycle when you stop making payments. Moreover, the lender can send in the repo man to repossess the motorcycle without informing you but will keep you updated with what happens to the motorcycle.
How Do You Remove the Loan on the Motorcycle?
You can’t remove the motorcycle loan until you pay off your debt. First, find out the amount you owe to know your remaining loan balance from the loan statement. You may call your lender to be sure of the number.
Meanwhile, if you sell a financed motorcycle without a title, the lender files a case against you, and the court compels you to turn in the motorcycle.
What if you refuse to turn in the financed motorcycle? If the law enforcement can’t track you for the motorcycle, it is reported stolen. So, your potential buyer will be buying a stolen motorcycle without a title.
How to Sell a Motorcycle with a Lien
There’s no big deal in getting rid of a financed bike. Besides, it saves you the hassle of repossession, which hurts your credit for about seven years. Moreover, selling a financed motorcycle is one of the ways to get out of a motorcycle loan.
Below are the ways to sell a motorcycle with a lien:
Pay Off on Your Motorcycle
It is possible to remove a lien from your financed motorcycle and clear the title when you pay off the debt. You can pay it off with your money, but it could be that you have no lump sum to cover the owed amount.
Alternatively, you can get a co-signer to pay off the loan.
Moreover, your motorcycle buyer can pay upfront for the motorcycle before getting the title certificate. You can then pay off the owed amount from the proceeds of the motorcycle sale.
You can work with your lender to conclude the motorcycle sale. Depending on the loan agreement, you can complete the deal at the credit union or bank holding the lien. If your lienholder is local, use their location for sale. They take the sales money for your debt and sign over the title to the buyer. The title may or may not be signed over on the spot.
If your lender is not local, however, you may have to pay off the loan, or the lender will agree to transfer your loan to the buyer.
Meanwhile, if the buyer is paying off the loan, they should make two certified checks (a copy for you and the other for the lien holder). Consider asking the buyer out for launch for sparing their time.
Sell to a Dealer
Your local dealership is prepared to handle the motorcycle lien paperwork.
Unfortunately, they may not pay the same price for the bike compared to a private buyer.
When Your Motorcycle Loan is Upside Down/Negative Equity
When you owe more on your loan than the worth of your motorcycle, it is known as being upside down or having negative equity.
Typically, owing more on loan than your motorcycle worth happens when the motorcycle has been involved in an accident or any damage.
If you have negative equity or upside down loan, hold the motorcycle until you pay the debt and regain some equity.
If you sell a financed but damaged motorcycle, you must cover the negative balance on your loan with additional cash. Of course, nobody will pay reasonably for a damaged motorcycle.
What Happens After Selling a Motorcycle with Lien
After you or a buyer pays off the loan, the lender or the bank, also known as the lien holder, releases the title. Depending on your lender, the ownership transfer may not happen immediately. The bank may take up to 7-14 days to prepare and release the title.
Thereafter, you may require a nearby tags place to fax a request form to the bank asking for the title to be released to the buyer and not you.
When the bank releases the title, they may not transfer it to the buyer without you, and the buyer may become uncomfortable.
Have the title sent to a nearby tag place, and they will sort it out.
Depending on the agreement with your lender, you or the lender will write a bill of sale for the buyer to serve as proof of ownership.
After that, the tag place will contact you that the title has arrived. You can then stop by and release the title as an open title, and the new owner claims the open title at the tag place at leisure.
If your state issues new plates per registration, collect your motorcycle plate.
To sell a motorcycle with a lien is easy. Like I mentioned earlier, I have sold a motorcycle with a lien on it, had the buyer pay it off, receive the title and hand it to them.
Never sell a bike you owe on without informing the buyer and the lender because of the frustration that may follow.
If your buyer stays out of state, he’ll feel frustrated a lot and sometimes feels scammed. So, always get in touch and update them with every development until you ship the send the title to them.
Finally, when negotiating a motorcycle you owe on, tell the potential buyer that you are upside down. If you tell them, for instance, that you owe $3,000 on a $7,000 Triumph Street Triple R, they will lowball your life out.
Depending on your state, you may have to turn in the license plate. In Illinois, you can keep the plate.