Dave Ramsey Total Money Makeover

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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.

Barbara

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