I'm helping my boyfriend buy a used car ... how do I get listed as lienholder on title?

Question

My boyfriend needs a cheap used car but doesn't have enough money.  He would need about $1,000 - $2,000.  I'm willing to help, but know I need to protect myself in a worst case scenario like bankruptcy or a breakup.

I don't want to cosign on a loan in his name (could ruin my credit if not paid) or just loan him cash (too hard to pursue in court if he defaults, and can written off in a bankruptcy), so I think the best solution is for me to be listed as a lienholder on the title until he pays me back.  I'd just put my name on the title as the owner of the car, but in that case -- I'm assuming -- he couldn't register and insure it in his own name.

We'd be buying the car from an individual, not a dealership.  If being lienholder is the best answer, how do I do this?  Is there a place for me to sign as lienholder on the title when we go to pick up the car and the owner signs it over, or do I need to fill out additional paperwork with the DMV?

sactoking · Accepted Answer

You need to have him sign a Promissory Note and put it on file with the DMV for them to list you as a lienholder.  The Promissory Note is a loan agreement between two private parties.  You can have him sign a general Note, in which case he owes you the money no matter what happens, or you can have the language read such that the vehicle will be on lien as collateral for the loan.  That way, if he gets in an accident and the car is totaled, you collect before he does. 

Check with a reputable attorney for Promissory Note documents.  Don't want to pay an attorney?  Places like Staples and Office Max have generic templates for many legal documents in their business sections now.  You can use one of those, but the language may not be optimal.

sensible_man · Answer

While I can appreciate your concerns, I don't think the DMV will care. Since you are not a licensed loan company, you need to get a contract signed and notarized between you and the BF. A consultation with an attorney is cheaper than signing papers that are not legal or cannot be pursued. Nice to see you are intelligent enough to cover yourself now instead of writing here later to complain you lost the car and the BF and cannot do anything about it.

nj2pa2nc · Answer

do not do it-let him save up the money. have you ever watched Judge Judy. how is he getting to work now if he has no car.

Anonymous · Answer

In the time you took to write that, you could have called the DVM and found out...
That's one of the things they are there for.

I'm helping my boyfriend buy a used car ... how do I get listed as lienholder on title?

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