Trying to Sell a Car that isn't Paid for Yet?
To sell a car isn't an easy thing to do. If you take one to a used car dealership armed with Kelley Blue Book pricing information, they are just going to find ways to fault your car in many waysto prove to you that your car is in worse shape than the one the Blue Book speaks of and then drive the price down. If you try to sell it yourself, the hassle isn't anything to take lightly. You'll have to deal with all kinds of strange people, and ones who will try to outright steal from you. What if you need to sell a car, and you don't even really own it - because the car isn't fully paid for yet? Lots of people actually go through this; they often find that what they can get on their used car is a lot less than what they owe in car payments. Here's a guide on how to negotiate a situation where not everything is as it should be.
It's called an upside down ownership experience. And that's what happened to the housing market. People suddenly discovered that what their house was worth was a lot less than what they owed on it. Why does this happen? To begin with, people often opt for really long loans; and a car does begin to lose value after four or five years. The way a used car's value depreciates depends on the kind of incentives dealers offer on a new car of the same kind. If buying a new car of the same model is really cheap, thanks to the way car dealers put out attractive offers, your old car is going to look pretty expensive in comparison. They say that a quarter of all car owners are stuck in this situation. What makes it worse is when people roll over their debt on an old car over into the loan they get for a new car. Suddenly, they owe two cars worth of payments on one rundown car.
If you want to sell a car that's upside down in what is owed, you'll probably be happy to hear about something called guaranteed auto protection, or GAP insurance that helps protect you against this. However, most people don't opt for GAP insurance - probably because doing that makes them acknowledge that they are in over their heads. It's a sad comment on the state of personal finance in this country that so many people will try to look away from anything that shows them that they are living beyond their means. If you are in a situation where you really feel you need a new car when you're old car isn't all paid for, the smart thing to do, the experts say, is to wait until you're done with all your payments for your old car.
But sometimes, you simply have to sell your old car; the car may have real problems, or it may truly be too small for your deeds. In that case, making a private sale of the car would be the smartest thing to do. But it's not that easy when you don't have clear ownership because of an unpaid car payments situation. You need to tell the DMV that you need to sell a car when you don't quite own it, and get all the paperwork needed; and you need to consult with the lender that made the loan to see how you can get your car released. Without these in place, it's impossible to sell a car and transfer ownership to the buyer.
What do you do if the lender wants you to first pay off your loan before they will release your ownership papers, and you need the ownership papers to get the money to pay off a loan? It is a real problem. You could take the buyer to the DMV for a temporary operating permit that will let him drive the car until you get the loan over with. Another option would be to get a loan (you could borrow from your 401(k) or make use of a home equity credit) to pay the car loan off.
And of course, if all else fails, you could always run crying to a used car dealership to sell a car. They take care of all the paperwork, and it's no longer your problem.
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