How do I sell a vehicle to somebody on payment and protect myself?
2 attorney answers
If you sell a vehicle to a third party and you agree to finance it or "tote the note" then you will become a secured creditor. It is critical if you agree to finance the purchase that you have a promissory note, perhaps a security agreement and that the vehicle title be noted with you as the first "lienholder".
By selling your vehicle, but retaining an interest in the vehicle (if he or she defaults), then you are becoming a secured creditor (similar to the bank who loans money). To ensure that you are perfected, then you can title the vehicle to him, but ensure that you retain yourself as a "lienholder." Upon his/her making the final payment, then you can then release the lien on the vehicle. If he/she defaults, then depending on whether you have a written agreement and the contents thereof, you may be able to take repossession ("repo") the vehicle and then sell it for the remaining amount. But I would recommend having a written contract to protect yourself and then having yourself as the lienholder on the certificate of title.
PLEASE READ. By responding to this question, this does not provide, create, or otherwise establish an attorney-client relationship. The response is very general and may not be tailored to the specific facts of your issue. I still recommend seeking a professional consultation with a licensed attorney. By using this advice, you agree to hold the person giving said advice free from any liability or harm.