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Selling a car under lien


Mathius's Avatar
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06-30-07, 09:04 PM   #1  
Selling a car under lien

I bought a truck a year ago, of course I had to take out a loan, it's a nice vehicle. Now I'm having to look for an apartment and finances are becoming issues.

Is it possible to sell my truck even though its under loan? I assume I would just have to get enough for it to pay it off. I'm guessing the bank won't buy it back?

How do you go about completing the sale? The prospective buyer is going to want the title, but I can't get the title transfered until the loan is paid off and the bank sends it. But I can't pay it off 'til the buyer gives me the money. Do I just write up a contract?

As long as I get the money to pay off the truck, I don't care what they do with it from that point on, but the buyer is no doubt going to want the title.

Mathius

 
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07-01-07, 04:34 AM   #2  
You can sell it but the lien holder needs to be involved in the sale. Basically you would go to the lien holder with the buyer and he would either pay off the note or refiance it in his name. Either way the lien holder gets paid and you are no longer obligated. If the sale price is less than the pay off you will have to pony up the extra $


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07-01-07, 10:51 AM   #3  
This is common. Of course the bank won't buy it, they are in the business of loaning money, not buying cars. You will have to pay the note to get a clear title to transfer the vehicle to the new owner.

 
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07-01-07, 03:55 PM   #4  
Posted By: marksr You can sell it but the lien holder needs to be involved in the sale. Basically you would go to the lien holder with the buyer and he would either pay off the note or refiance it in his name. Either way the lien holder gets paid and you are no longer obligated. If the sale price is less than the pay off you will have to pony up the extra $
So what happens if I have 5k left on my my loan, I ask 7 or 8k for the vehicle, because I want some negotiating room (In case someone tries to talk me down. I'm just throwing numbers out btw, these aren't real figures.) Then someone comes around who is willing to pay 8k for the vehicle. If I go to the bank and say he's going to pay 8 for it, then what? If the guy sees I only have 5 left, he's not likely to give me more than that.

Mathius

 
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07-01-07, 04:24 PM   #5  
What is common here is to have a certified cheque made out jointly to the bank and the seller.
This way the bank takes what is owing against the vehicle, here they remove the registered lien against the vehicle and then turn over the remaining funds.

If the vehicle won't sell for as much as is owing then you would need to make arrangements with the bank other wise the vehicle cannot be sold.


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07-01-07, 05:12 PM   #6  
So basically, first step before even putting a sale sign on it is call the bank?

Mathius

 
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07-01-07, 05:31 PM   #7  
Yes, technically they own the vehicle.

They would be happy to talk to you because even if you were not going to buy right away you will be again a potential customer on another vehicle.
Just don't go into too much detail if you are not selling the vehicle under positive circumstances.........Play your cards in close.


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07-01-07, 06:38 PM   #8  
Posted By: GregH Yes, technically they own the vehicle.

They would be happy to talk to you because even if you were not going to buy right away you will be again a potential customer on another vehicle.
Just don't go into too much detail if you are not selling the vehicle under positive circumstances.........Play your cards in close.
Not sure what falls under "positive circumstances" ? If it's an issue of me just needing the money is that something I should hide from them?

I honestly can't see why they should care about my reasons, they just want their money and I've never been late on a payment.

I can afford the vehicle right now, but I'm going to be hurting badly when I move into an apartment and pickup a rent bill. Then it could become an issue.

Mathius

 
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07-02-07, 05:05 AM   #9  
Posted By: Mathius If I go to the bank and say he's going to pay 8 for it, then what? If the guy sees I only have 5 left, he's not likely to give me more than that.


Shouldn't be an issue. What if you had paid cash for the truck? Would you not be able to get a decent price because it's paid for?

Calling the bank first will also tell you what the pay off is. They shouldn't care if you sell it as long as they get their money. Since you are on top of the payments they won't worry about your reasons for selling.

'negative circumstances' would be if you are trying to sell the vehicle before it gets repo'd


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07-02-07, 12:43 PM   #10  
Posted By: marksr Shouldn't be an issue. What if you had paid cash for the truck? Would you not be able to get a decent price because it's paid for?

Calling the bank first will also tell you what the pay off is. They shouldn't care if you sell it as long as they get their money. Since you are on top of the payments they won't worry about your reasons for selling.

'negative circumstances' would be if you are trying to sell the vehicle before it gets repo'd
Oh ok. No, no concerns of it getting repo'd. I actually took out this loan for two reasons... Obviously I needed better transportation, that's why I bought another vehicle, but also because I thought it would help build my credit after bankruptcy. I've never been late on a payment, but I'm starting to wonder if the monthly isn't a little too hot to handle now that I need to get an apartment. I really can't think of anywhere else where I can cut my expenses enough to make a difference.

But on that first part, my concern mainly is that the way I read it, the buyer and seller had to go to the bank representative together. If the buyer sees that the seller's payoff was 5k and he agreed to pay 7k, what's to stop him from backing out, or demanding only that he pay the 5k? In other words, he'll see the markup.

I'm not trying to be greedy, really, but if I choose to sell the truck I'm going to get as much as I can for it. If I put a higher number and put it as negotiable, it seems like it would sell better, because people think they're haggling you down. Also, like I said, if someone's willing to pay the higher price, I could use the money for other bills.

Mathius

 
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07-02-07, 03:11 PM   #11  
Posted By: Mathius If the buyer sees that the seller's payoff was 5k and he agreed to pay 7k, what's to stop him from backing out, or demanding only that he pay the 5k?

IMO this would only be an issue if the buyer percieved you to be desperate to get out from under the payments. I doubt you could consider anything over payoff a profit, rather this is money you have already paid out - your money!


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07-02-07, 03:40 PM   #12  
Under no circumstances should the buyer have any clue about how much is owing.

Like I said, the buyer would make the cheque payable to both you and the bank or just the bank.
How the bank disburses the total amount is none of the buyer's business.
He would only write one cheque.


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07-06-07, 11:32 AM   #13  
Some time back I bought a vehicle that had an outstanding lien. I went to the bank that held the lien (with the seller) and wrote one check to the bank for the amount the seller and I had agreed upon. I was given the title marked "lien paid" and went on my way. Never knew or cared how much the seller was making (or not making).

BTW - If I was in your situation and the bank let the buyer know what was owed I would change banks that same day...

A simple phone call to the bank to the specific indivdual that you will deal with will eliminate your concerns. Tell them how you want the transaction handled and that should be all that's necessary.

 
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08-19-07, 08:02 PM   #14  
Here's how you do it...

I just did this for my g/f's car and on cars in the past:

1) Call your bank to find the payoff amount for your loan. They will typically give you a "good until" date.

2) Negotiate the price with the buyer - it has nothing to do with what you owe on the car but rather the car's market value (however, the amount you have paid per month over the past year should mean that you can sell the car for more than you owe).

3) Write up a bill of sale that states the price of the car, and that two bank checks will be written. One to the lien holder, the other to you.

4) The buyer's bank may ask for conformation of ownership like a copy of the title or registration.

5) The buyer will send the checks out and the bank will issue a "Lien Release Form". This can take upto a week but you can have the buyer overnight the check so it clears within a day or two.

6) Once the check clears sign over the title and give the buyer the title and the lien release form. They will take this to the DMV and have the state issue a new title with their lien holder.

The problem with this transaction is that it takes extra time and could turn off some buyers. However, if a car is new they will typically expect that money is still owed on it.

The one sticking point that I have is that the buyer has given you two checks and you can either hope they clear and give him the title, or wait for them to clear in which case he can get nervous.

In one situation I signed over the title but didn't give him the keys until the checks cleared. You have to be careful because people now make convincing fake bank checks that the banks will actually cash then sue you for the money if they can't get it!

Don't deal with people out of the country and use your best judgement.

Good luck!

 
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