Selling while on loan

I'll second @Daria I've worked in banking (no CU's) and things can work out that way. I wouldn't think it's a quick turn around though. CU's would be the easiest and cheapest route.

 

HA Ok well I'm already on the phone with my CU

 

Good Luck OP!

 

Oh, I had no idea I could do that. I will look into that for my state as that would solve one problem.

 

I don't think the buyer technically owns the vehicle until the title is transferred.

As far as the loan, it's still your responsibility until paid off.

If the buyer crashed the car, it's his responsibility under his insurance, as a primary. If he didn't have insurance or it didn't cover everything, yours would be secondary.

The bill of sale is the buyer's protection against you deciding not to sign the title over.

 

Just an update for others' info...

After talking to my out-of-state CU and my local CU, there is only a $20 refinance fee involved. So I am refinancing with the local CU at a slightly higher rate, assuming I'll be selling it very soon anyway. That way we can go there together and the buyer can just pay the bank directly the payoff amount, and pay me the balance of the price we agree on, and get the title same day. (That's not possible at every CU but the local one said they give it out immediately.) That way they own the vehicle and can register it right away.

I'll probably still get the temp plates for them so they don't drive off with my tags on the truck, and I'll keep it insured until the loan is paid off at the bank. There is some goofiness involved with the title being transferred from out-of-state, but that can all happen behind the scenes prior to sale, not affecting the buyer.

My only other question: Should I/can I require the buyer to pay cash to the bank? Is there any risk that their check could bounce or not clear when they payoff the loan, or does the bank somehow confirm it's all good?

Edit: for clarity

 

No. You should not be required to do that.


You need to require a cashiers check or wire of the cash from a cash buyer.

 

If the buyer pays by check,than nothing happens on your end until the check clears the bank usually 2 weeks.

 

Ah so the cash or cashier's check just expedites things.

 

Sorry I don't have time to read the entire thread but OP what state are you in?

I am in Cali and I did this same scenario with a previous vehicle. PM me if you want.

 

In addition to all the very useful information provided in this thread, I can add a few more things. If I am paying cash for a vehicle, I am walking away with a title. There are too many things that can go wrong without it. I hear people all the time say, "The title is lost. I got a bill of sale. I just need to file for a lost title". No, a bill of sale does not prove ownership. I can write you a bill of sale for that Tesla across the street. Doesn't mean you own it. Also, only the registered owner can file for a lost title.

Also, even if you get a title, if the seller is not the registered owner, things can go wrong. A few examples. Vehicle was stolen and title was in the glovebox. Thief forges signature and sells it.

Here's another one. A guy buys a very high dollar car off Craigslist. They meet in a parking lot, exchange cash and car with signed off title. The buyer just assumes the seller is the registered owner and doesn't ask for ID. It turns out the Craigslist guy bought the car the day before from the registered owner with a bogus Cashiers check. The registered owner reports it to the police a week later when the bank lets them know the check is bad. The police seize the car. The Craigslist guy is long gone with the cash and no idea who he is.

True story.

 

Well it's a good thing that none of the scenarios you've described are anywhere close to what is happening here.

 

Ha, I was thinking the same thing

 

I bought my last car and the dude still owed te bank, just did all the paperwork and he seemed legit so I gave him the cash, took the car and all the paperwork aside from the title which the bank had, he paid the bank the following week and sent me the title, yes it sounds a little risky especially nowadays with all the scams but can be doable with correct paperwork etc.

 

Warning: Word wall ahead. Proceed with caution.

Disclaimer: I am not a lawyer and none of my advice should be seen as professional legal counsel. You should check with your own attorney and laws before you take anything I (or anyone else on the world wide web) says as fact.

Refinance before you sell just to locate a title somewhere? No. I would never do this. Especially on a long established loan for the reason that your very first payment will be nearly entirely interest... read: profit to the bank and money out of your pocket not going to the principal. Sure you plan to pay it off and sell it quickly but life happens. Assuming the average payment of $500 in America right now that means that while they claim to charge you very low fees it's because they know that if you make even one payment they just made $500 off of your. Lending institutions aren't in the process of doing favors and the devil is in the details. I'm sure your payment is lower but the fact still remains. Not to mention if I'm a buyer I feel better about a vehicle with a long-term note on it and a contract to deliver a clean title free of all encumbrances than a newly refinanced vehicle with title in the wind somewhere with the assumption that it's being transferred to the new lean holder. A big part of dealing private party is the actual private party I'm entering into an agreement with and how I "feel" about them as a human being and how "clean" the story is. You may seem like a stand up chap but if the story seems shaky or the slightest bit out of the ordinary I'm walking. That doesn't mean everyone would but I sure as heck would. More on the "feeling" aspect of the transaction later.

I've bought and sold LOTs of cars/trucks/motorcycles (as buyer, seller, transaction broker and salesman) over the years and anything with a title is similar in most states. It can vary by state so check with local laws...

The bill of sale is the proof that the new owner needs to show LE if he gets pulled over. This proves he is in lawful possession while a title transference is taking place that prevents him for having the proper registration which will replace this bill of sale once everything is in place. Simple enough. Buyer and seller both need a copy for their own reasons. Some counties have a bill of sale they REQUIRE to present to get it registered so make sure you check with your local DMV on what documents are required at the time of registration. Getting a general bill of sale isn't good enough for many DMVs anymore as they have their own document they want signed and prepared exactly as they have specified. Keep copies with you and in the vehicle until your registration is processed and then your two copies replace both copies in these same two locations proving you rightfully own the vehicle. It is not wise or advised that you carry the title around either on your person or in the vehicle to prove ownership for obvious reasons and this is why most LE prefers a bill of sale as proof of ownership. Private party sales do NOT come with a transit tag to display and would NOT get one in the seller's name or anything like that as it would be considered fictitious plates in most jurisdictions & your bill of sale will convey ownership to anyone who questions it. It's like a receipt at Walmart, if anyone questions you walking out of the store with a loaf of bread the receipt proves you paid for it and are the rightful owner. End of story. A signed bill of sale is this receipt for the vehicle while the red tape is worked out behind the scenes with a more permanent sort of receipt that will replace the bill of sale in due time. Again, our local laws may differ but this is the most common.

Now, to the lien... You can either meet at the chap's lending institution and leave with the difference after signing a Power of Attorney or you can simply prepare a simple contract between you and the buyer guaranteeing the title to be transferred to the new owner upon release by the lien holder. There is a degree of "trust" that goes into play in either scenario. The former requires you to "trust" that the lending institution will use the proceeds of the loan to satisfy your lien payoff to release the title. It's not super likely that the lending institution will abscond with your money but it's important that you understand that it's YOUR money until the point it's delivered to your lien holder on you behalf. Get something in writing by the lending institution that says, in no uncertain terms, it's going to pay off your loan as per the terms of the agreement. Just a little CYA as that chunk could be substantial depending on the vehicle being sold. The latter requires the trust to fall more on the shoulders of the buyer that he trusts you as the seller to uphold the terms of the contract you both signed. Sure he (or she) has got a contract but if you don't deliver a title free of any other debts they're going to have to use that contract in court which will cost more time and money. Ideally when your loan is paid off the lien holder will release title to you and when it arrives in the mail you will sign it and FedEx or hand deliver it to the new owner so he can get his title processed or loan processed (often times the bank will process the loan in advance and cut the guy a cashier's check to present to the seller as payment putting the onus on the buyer to get the title to them). Either of these methods is acceptable so long as both buyer and seller agree and in some cases one method may be preferred/required over the other. It's up to the buyer and seller to agree to terms that are fully documented and signed to should anything come up.

If you get proper documentation and do your research you will find that 99.99% of these scenarios end w/o incident. One person wants to sell a vehicle as much as the other person wants to buy the vehicle so they will do everything in their power to assure the transaction goes smoothly. If you get a funny feeling about the other person then don't do the deal. Walk away. No amount of money is worth getting yourself involved with someone you don't trust or get a funny vibe from. Ultimately you're entering into an agreement with this other person so you want to make sure you get a good feeling as sometimes your gut is the best gauge of others. Not always but most times. Dealers will try to make it seem like you have to go through them to be safe but I can tell you that I've had some sketchy things go down at vehicle dealerships (both as and as a employee) so nothing is promised. Just work a deal you're happy with and document everything.

 

Lots of good info there although a lot of it won't apply to my situation. I can say I did just lose a buyer because he was freaked out by the process of refinancing the loan to a local CU -- even though it would have made it more transparent for him in the long run, there is a wait time of 2 weeks for the title to be available at the new CU. When I told him this, he backed off. Which is understandable because it was all happening *during* our discussion, not before the ad went up, and it probably seemed like I was just dropping new terms on the sale out of nowhere. And it represented a disadvantage to his offer, in that he knew I'd have plenty of other offers in those 2 weeks. There is a huge market for Tacomas.

So even though that particular buyer got spooked by it, I still think it will be better to go with the buyer to a local branch so there is a third party and so they can get the title the same day. If I was buying a car on lien, I would prefer to do it that way rather than give the seller money and "hope" I get the title in 2 weeks, even with a bill of sale. It's not so much about what's technically legal or true in any case -- buying and selling is so much about the vibe you get, as you mentioned.

 

So because of all the leaks and other crap going on with this truck, (I started another thread on this--all this came up just as I started getting responses to my ad) I am very close to just selling my truck to CarMax. I have an appointment for tomorrow for an appraisal. They said over the phone that because of the mileage (160,000) they would only be able to offer me "wholesale." Which, according to KBB, is something like $4-6K. It's a 2006 4x4 4-cyl 5-speed access cab. A/C compressor is broken, clutch master leak, mysterious wet (A/C?) leak on passenger side footwell that I can't seem to figure out. Otherwise perfectly good--frame has minor rust but looks fine.

Theoretically I could probably get $7-9K in a private sale, but with these leaks and the A/C issue, I don't know.

What do you all suggest? Hold out for a buyer or cut my losses?

I owe about $4K on the lien.

 

Bump.