- July 22, 2008 at 3:52 pm #260418
On Thu, 24 Jul 2008 09:25:28 -0700 (PDT), you wrote:
>I have a question about selling the car for a beater.
>If you sell a car that has a loan on it, you are still responsible for paying
that loan off. So, if you sell the car and get a beater, even paying cash for
the beater, you still have the car payment for the car you no longer have. Or
am I missing something? It is not like you get the money that you are currently
paying for the car freed up to pay on your other debts.
You have to pay the loan off to get the clear title for the car. No
clear title, no sale. In most car loans the car is the collateral for
the loan, and the finance company is listed as a lien holder on the
title until the loan is paid off.
If there is a lien holder listed on the title, most states will not
transfer the title. Some will with either proof the lien is paid in
full (the release) or the (notarized) approval of the lien holder.
It’s one of the things a new car dealer does when you buy a new car
without having paid off the older one. The finance companies have to
approve the deal.
When you pay off the loan, the finance company forwards the paperwork
to the state, which issues you a new (clear) title, without any lien
holder listed. Check with the local motor vehicle licensing office
for the rules in your state.
If you can sell the car for more than the payoff on the loan, pay the
loan off, and have money left to buy a beater car go for it.
In reality, unless you have enough cash to pay off the loan before you
try to sell the car, nothing will happen. Few people are willing to
hand over money, and get a promise of a title in a week. First you
have to cash the check, then you have to pay off the loan and get the
release to get the title in your name only, the you need to get the
title, and only then can you legally sign it over to a buyer.
You might be able to work a deal with a dealer, but seller a higher
priced car and replacing it with a beater is a loss for them. Expect
to lose your shirt.
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