I am selling a car with a loan on it, but how do I complete the sale with the buyer if I am "upside-down" on the loan? (search used already!)

February 6, 2006 9:06 AM

I am selling a car with a loan on it, but how do I complete the sale with the buyer if I am "upside-down" on the loan? (search used already!)

As I read via searching here, in a transaction where there is a loan on the car, the buyer make the check out to the bank and they send him the title. However, if I am upside down on the loan (owing more than the value/sale price), do I also send the difference of the selling price vs. the payoff to the bank? Will the bank rectify this and allow 2 payments to clear the loan and transfer the title? Sounds like they would. I tried to contact them but gave up after 25 minutes listening to music, and I want to get the ad going!

posted by skyguy14 to Travel & Transportation (4 answers total)

I think you understand that you must pay the lending institution the full outstanding balance ("pay-off amount") of the loan before they'll clear your title. They don't care where the money comes from, and I'm as sure as I can be without listening to the same Muzak that they'd accept check from the buyer supplemented with another from you to cover the difference.
posted by mojohand at 9:15 AM on February 6, 2006

You could always go to a dealership. They'll usually take care of getting your loan paid off.
posted by empath at 9:41 AM on February 6, 2006

If you're not already involved in a sale and have one near, give CarMax a shot. They actually give favorable offers more often than not (I've sold a car there), and the difference in price vs. private party is more than made up for in ease of sale wrt. these things. It takes an hour to appraise the car, an hour to do the paperwork if you accept the offer, and you can drive just about any car sold in the US in the past 6 years while you wait.
posted by kcm at 9:48 AM on February 6, 2006

Just to add, I asked this question myself and didn't really get a good answer. I ended up just paying off the loan myself (because I could afford it), getting the title clear, and then selling to the private buyer who just gave me a check for the whole amount. I went to CarMax and they under bid me by about $1,000 compared to a dealership who sells the brand I was trying to get rid of (AUDI A4). So, you may do better than CarMax by taking it to a dealer. Neither option will be as good a deal as a private sale, but surely will be less hassle.
posted by qwip at 1:56 PM on February 6, 2006