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How do you sell a car you owe on?

  1. Oct 16, 2011 #1
    Long story short, I have 2 cars. One is paid for that I never drive, but works perfectly fine. The other is a 2008 with a surprisingly low 20k mi. I was going to sell the older car, but I have been thinking that it would be a better idea to sell the new car and eliminate monthly payments. It's worth 34k according to kbb.com's low estimate. I owe 20k on it still. How can I sell the thing if I still owe on it? I have never sold a car before, I used to just trade them in before I was a poor student. Is the buyer expected to write me a check and wait for the title? Am I expected to give them the car and wait for their check to clear to pay, and then send them the title? Where should I list the car?
  2. jcsd
  3. Oct 16, 2011 #2


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    One still owes the principal on the loan, and I expect that the title has a lien on it, and the lien is owned by the lending agency. One would have to sell it pending the title transfer, and that would require the permission of the lending agency. One could transfer the loan and charge an additional amount subject to agreement by the purchaser.

    Alternative, one could get a bridge loan, pay off the car, get the title, and sell it outright.

    It really hinges on what the buyer and lending agency are willing to do.
  4. Oct 16, 2011 #3
    Typically you will get a better price selling to an individual vs. a dealership.

    Dealerships are in the business of reselling purchased vehicles and will offer you less then its worth, as they are going to sell it to someone else.

    An individual will buy it to own it in most cases, at least for a some period of time.

    Despite this, it is only worth what someone else is willing to pay for it, regardless of any estimated market value.

    I do agree getting rid of a car payment is a good idea, if the older vehicle doesn't require too much maintenance, but even if its average monthly cost is less then payments, you're still ahead.

    Low cost ads, and word of mouth are good ways to sell a car.
  5. Oct 16, 2011 #4
    The older vehicle is fine, just needs new tires. I really only drive a car when it rains anyway. I guess I'll call my finance company and see what they say. I just wanted to ask how something like that normally works because I doubt the financial institution has my best interest at heart.

    Searching the internet for an answer to my question just yielded a bunch of questionable blogs that pointed towards various internet brokering firms..
  6. Oct 16, 2011 #5


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    The bottom line is simple. If you have a loan that is secured against the value of the car, you don't "own" the car, the loan company does. So you can't sell it, because you don't own it. You need to pay off the loan before you can sell it - possibly by taking out a short term unsecured loan, which will be at a higher rate of interest, but if you have your buyer lined up you will only need it for a few days while the cash changes hands.

    Any sensible private buyer would run a check that you really were the owner before they paid you any cash. That would show it there was an outstanding loan, as well as checking if the car was stolen, illegally rebuilt after an insurance company writeoff, etc.
  7. Oct 17, 2011 #6


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    I don't know about Yankeeville, but over here, you can sell your portion, and get the buyer to pay off the finance company for the portion they own.
  8. Oct 18, 2011 #7


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    The finance company is the key. If the new buyer has cash just meet him/her at the finance company, preferably by appointment. If the buyer needs a loan your finance company may provide the buyer with a loan.
  9. Oct 18, 2011 #8
    Funny, I am about to sell my car which I own nothing on anymore, but the title still lists the lien and I lost my letter saying I'm all settled with the finance company.
  10. Oct 18, 2011 #9


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    the problem is that most sellers want to sell for more than the car is worth, i.e. they owe more than it is worth. Thats why they want to sell. i have run into this problem trying to buy a used BMW. The seller wanted me to pay him and he would then pay off the loan with my money and then send me the title. the lady at the title office laughed so hard when i told her that she almost fell out of her chair. then i got the "if there one thing i have learned sir,...." lecture. the seller could never grasp the problem. we parted ways.

    it dawned on me later i could have withheld part of the selling price until i got the title,

    but probably he could not have raised the money to pay off the loan that way.

    good luck to you.
  11. Oct 18, 2011 #10
    I don't owe more than it's worth, so that's not really an issue. They are still selling for enough that pretty much anyone who want's to buy it will be financing anyway. I called the title holder today, and they said it's no big deal, I can just go with them to their financial institution, and their bank will pay my bank, and my bank will pay me. No problem at all.

    If it was really a problem, I could probably pay it off, but that would leave me pretty strapped for cash, and if the buyer backed out I would be out of luck.
  12. Oct 18, 2011 #11


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    The finance company should be able to give you another one.
  13. Oct 19, 2011 #12
    The title on the newer car would be a lien title, so:

    1. Draw up a sales agreement, including date, VIN, full buyer name/address and seller name/address, and send copy as a counter/cashier's check for the full balance of the loan to the lienholder. I think most DMV's have standard forms compliant with local and state laws, so best to use that. Verify buyer via their drivers license, get a copy of it if you can, and make sure funds clear before confering title.

    2. I think lien titles can be conferred. If not, contact your lienholder. Regardless, I think there's a grace period in law of between 30 and 90 days to get the paperwork straight. Once the lienholder has received the funds paying off the loan, they'll release the title to the new owner.

    Not complicated. Just cross your t's and jot your i's. :)
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