Minhas landed a new job in Toronto, Canada forcing him to leave his home in Edmonton. He decided his massive GMC Yukon wouldn’t be the best fit for moving to the big city. When he tried to sell his 2021 GMC Yukon, Harvey Minhas discovered a $1 lien on his SUV from the dealership where he bought it only a year previous. 

What does it mean to have a car with a lien on it? 

A car lien essentially acts as an insurance policy for lenders. When you take out a loan to purchase a new or used car, a lender wants to ensure they are protected if you default. 

The car you purchase has a lien on the title until you completely pay off the car. Not only does a lien act as insurance for a lender, but a lien also allows a creditor to repossess your car if you default on your loan.

Despite Minhas paying the car off in full, the hidden $1 lien stopped him from selling the Yukon. According to GM Authority, after reviewing the fine print, he discovered a clause stipulating that the SUV could not be sold, transferred in ownership, or exported from Canada for 12 months after purchase. 

“They said even if you do sell it, it might end up in the hands of an exporter, and so we don’t want this vehicle crossing the border,” Minhas said, per Global News. 

Why would a dealer put a hidden lien on a car? 

It’s clear that in this current market, dealers would prefer that fewer people sell cars privately. With used cars in short supply, private sales are taking inventory from dealers. According to the president of the Motor Dealers’ Association of Alberta, Gerald Wood, typically clauses like the one on the 2021 GMC Yukon are reserved for super high-end models. But on something like a GMC Yukon, the practice is all but unheard of. 

“It’s really done to make sure that we can protect the pricing levels in Canada so that Americans don’t come to Canada to purchase the vehicle,” Wood said. 

This doesn’t seem like a very farfetched idea given the market, and tough spot dealers are in. However, it does leave Minhas in a pretty tight spot as well, especially when you consider the Yukon is fully paid off. 

“Everyone’s financial situation or situation, in general, can change at any time and mine did, and I don’t want anyone else to go through the same thing I did,” Minhas said. 

How can you check for a lien on a car? 

This GMC Yukon situation is a nice reminder to check any loan paperwork closely. Although this lien was reportedly hidden, the buyer should always know what they can do with their property. 

Even aside from dealers, buying privately can have similar risks. Just like carfax or other such VIN-related information, there are plenty of online VIN searching tools that can alert you of a car’s title situation before you buy it.