First of all, don't ever rely on what the seller tells you. Check it out with a disinterested party--the state Department of Motor Vehicles, the bank, a random dealership you walk into off the street.....
If you give someone money without taking a valid title signed over to you at the same time, you're offering them the chance to rip you off. Who's to say you ever get the title in return? How would you enforce this? Even assuming the seller is 100% honest, what if he cashes your payment and the money gets taken at gunpoint on his way to the bank?
Even if desperate, I sure wouldn't give him more than the $500 he needs to pay off the bank. Then I'd accept his generous offer of a loaner for five days or longer. Have him put his permission for you to ride his bike in writing, just in case. Obviously, this puts him at risk, not you--how does he know you'll return with the bike and the rest of the money.
But seriously. Tell him to call the bank and learn how to work something out which doesn't put you at risk. If he can't manage that much, turn and walk away.
Hope this helps.
Mark
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