Selling a Used Car With Money Owed

When you still owe money on your used car, but you want to sell it, you will have to pay the money you owe to the lender before the other party can take ownership. While you may think you must have the funds up front to pay off your car loan, you don't. In fact, you can close the current loan and sell the car at the same time when you take the right steps.

Instructions

1

Call your lender and ask specifically for the "pay-off amount" on the car. Write the amount down for future reference.

2

Find a buyer who is willing to pay you the amount that you owe on the used car. If you can't sell it for the amount you owe, you will have to pay the difference.

3

Call your lien holder and ask if you can come to their office to conduct the sale. Meet the buyer at the lien holder's location.

4

Instruct the buyer to pay the lien holder the amount owed on the vehicle, or the agreed-upon amount. Pay any outstanding balance out of your own pocket.

5

Complete any paperwork the lien holder requires to close the loan. Sign over the vehicle's title to the buyer.

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Questions Car Dealerships Do Not Want You to Ask When Buying a Car

A car is a major purchase, and you should do everything you can to not only make the best decision, but also to get the best price. No matter if you're in the market for a brand-new car or a pre-owned vehicle, ask your dealer the right questions to get the best deal. Some dealers don't want to hear certain questions, but asking them may help you save money.

New Vehicle Questions

If you're in the market for a new vehicle, ask lots of questions about the features of the vehicle. Remember, as soon as you drive it off the lot, it begins to depreciate, so you'll want to ensure you've made the best choice for your needs. Rather than letting the dealer "sell you" on all the bells and whistles, ask him which features are standard and which ones are options. You can request to see a written list of all the options, along with their fees, in order to compare it with other vehicles. Ask if you can remove pricey options, such as expensive wheel rims, so you can lower the cost. Test the salesperson's knowledge by asking him to compare his vehicle with a similar one from a different manufacturer. Ask questions about the car's safety ratings and features as well.

Pre-Owned Vehicle Questions

You might be able to save thousands of dollars purchasing a pre-owned vehicle that's only a year old. However, you need to ask questions to ensure you're not getting a lemon. Ask the salesperson about the dealership's specific reconditioning processes, as well as their inspection standards. Ask questions about the chosen vehicle's past, such as whether the vehicle was ever in an accident, has ever had body work or was ever in a flood. These types of potential issues may not be obvious so asking questions can help determine if the vehicle is in good shape. Ask the dealer about the previous owner, including exactly how many previous owners there was, as well as what the car was used for.

Warranty Questions

Before you drop a grand or more on an extended warranty, ask specific questions about that particular warranty. Ask what is covered in the warranty and if coverage changes over time. For example, some warranties only cover the car bumper to bumper for the first 12,000 miles. For the remaining warranty time period, only manufacturer recalls or obsolete items are covered. Ask if all maintenance and warranty work can be done at the dealership where you bought your car or if you would have to drive to another dealership that is far from your home.

Price Questions

While most American car dealerships clearly list both the invoice price and manufacturer's suggested retail price (MSRP), they do not tell you what the dealer holdback price is. According to The Negotiation Academy, this particular price is how much money the dealer earns from the manufacturer when they sell a vehicle. It is usually around 3 percent of the overall sticker price, which means that the dealer has a much lower cost than they would want you to know. Ask what it is, and then you can use that information during your negotiations.

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How to Negotiate With Car Dealers if You Are Paying Cash

Just because a dealership says its selling a car for a specific amount doesnt mean you cant negotiate the price. One of the staples of the car-buying process is negotiation. The salesman says one price, you say another and the two of you try meet somewhere in the middle. Revealing that youre a cash customer before negotiations begin gives you less power in the negotiations. Dealerships prefer to land finance deals for customers, because the dealership often pockets a small percentage of the loan payments.

Instructions

1

Shop around and ask for quotes from several dealers for vehicles that interest you. Ask for an estimate of the price. Decline any offers to test drive the vehicle until youve heard quotes from at least four to five dealerships.

2

Avoid mentioning that youre paying in cash. Most dealers assume people plan to finance, so theres no need to disclose your type of payment.

3

Point out any flaws you see while touring the vehicle or experience while driving it. A new vehicle should not present any problems, but used vehicles often will. Point out bad tires and brakes, the need for a wheel alignment and any other flaws that could cost you money down the road. Talk assertively when you point out problem areas. Dont say, I think the tires might be bad. Instead, state that the tires are bad. Dont give the dealer an opportunity to convince you otherwise.

4

Sit down with the car salesman and try to get him to mention the price first. If he doesnt, start out offering a few hundred dollars below the invoice price for a new car. If youre buying a used car, factor in the problems you saw and experienced with the car. Always shoot for lower than the advertised price.

5

Talk about your need for a cheaper overall price. Make sure the salesman understands youre not interested in talking about monthly payments. Doing so wont reveal youre a cash customer, but it does tell the salesman you want to focus on the total price and wont listen to tactics that reduce the monthly price.

6

Mention quotes from other dealers in an attempt to get the salesman to bring the price down.

7

Agree to a price thats close to the invoice, if youre buying new. The strategy of negotiating is knowing when to stand your ground and when to give in. Dont expect the salesman to give you the car $300 below invoice, but you should expect a price thats fairly close to invoice. If youre buying a used car, strive to meet the salesman in the middle, but dont agree on a price close to the sticker price if you dont feel the condition of the vehicle warrants that cost.

8

Reveal that youre paying for the car in cash once you and the dealer have agreed on a price.

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What Are the Chances Of Getting a Better Deal If I Refinance a Car Loan?

When you refinance a car loan, you can often dramatically lower your interest rate and your monthly loan payments. However, a number of factors including interest rates, your credit score and the age of your car have a direct impact on your ability to get a better deal by refinancing your car loan.

Credit Score

When you take out a car loan your lender checks your credit score. Most lenders require you to have a credit score in excess of 620 to obtain any kind of loan. People with credit scores higher than 740 are viewed as low-risk borrowers and pay the lowest interest rates. If your credit score has improved since you took out your original loan, then a lender may offer you a lower rate when you refinance. However, if your credit score has fallen since you bought your car, then expect your interest rate to increase if you refinance.

Interest Rates

The interest rates on car loans are directly impacted by movements of the U.S. prime rate -- an interest rate barometer that reflects the cost of borrowing for people with good credit. If you bought your car when rates were high, you can lower your rate by refinancing. If you bought your car when interest rates were low and rates have since risen, then you cannot lower your rate even if you have good credit because interest rate rises cause the bank's costs to increase and banks pass on these costs to borrowers.

Car

Cars lose value over time and most lenders only finance cars that are less than 6 or 7 years old because beyond that point most car warranties expire and cars tend to have more mechanical problems. The older your car gets, the more it costs to borrow against because banks offer better deals on newer cars that have a greater resale value than older cars with minimal resale value. Therefore, even if you have good credit and rates are low, the age of your car may preclude you from getting a better deal.

Considerations

If interest rates are low, you have good credit and a relatively new car, a finance company may offer you what sounds like a good deal on a refinance loan. However, take the loan term into account when you refinance because lowering your payment by $50 a month may sound good, but if you add two or three years to your loan term, then you end up paying more in the long run. Additionally, on some car loans you have to pre-pay the interest, in which case you gain nothing by refinancing and actually add to your costs because you basically pay interest on the same money to two lenders.

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How Do Joint Accounts Work When Trading in an Automobile?

If you and another person are listed on a vehicle title, both of you must sign the vehicle's title to transfer ownership to the dealership. You must have your joint co-owner's permission to trade the vehicle in toward another purchase. Dealers must follow state motor vehicle requirements for title transfers, and owner authorization is required.

Dealership Requirements

Your vehicle co-owner must come to the dealership to sign in front of a dealer representative. Even in states that require notarized signatures, owners must still sign at the dealer, as only one area is dedicated for a Notary to sign. Don't ask the co-owner to sign his portion of the title before you arrive at the dealer, as the dealer can't confirm that the owner signed for himself. If the co-owner doesn't want to visit the dealership, you can have him sign his portion of the title and go to a motor vehicle office to transfer the title into your name only. This way, you can offer the dealer a proper title that only you'll have to sign.

Out of State Joint Owner Consideration

If the co-owner lives out of state and can't come to the dealership, your dealer may work with you to get the title signed. If so, your dealer will mail any required paperwork to your joint owner for proper signatures. Before the dealer does this, it will confirm the co-owner's identity by obtaining personal and driver's license information to keep on file in case problems arise. The dealer will likely require a notarized form from the joint owner to validate authorization.

Title Holding States

A title holding state is one that doesn't send a vehicle title to the registered owner until the vehicle's lien has been satisfied; the title goes to the lender instead. If you live in a title holding state, you and your co-owner will have to sign paperwork other than the title that allows the dealer to pay off the vehicle's loan and transfer ownership on your behalf. Expect to complete a Power of Attorney form with the dealership. This form authorizes the dealer to transfer the vehicle's title without you or or your co-owner once it receives the title from the lien holder.

New Vehicle Purchase

If you're curious at to whether trading a vehicle with your co-owner requires you to also co-own the vehicle you purchase, the answer is no. Once the co-owner signs his portion of the title, he is no longer a part of your car deal. You can purchase the car in cash or finance it in your own name. States vary on registration rules, but you can expect to purchase new plates if the prior vehicle's registration was only in the co-owner's name. You can't transfer plates unless your name was on the previous registration.

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What a Repo Man Can Not Do by Law?

When you fail to make your car payments, the creditor can repossess your vehicle at any time. The creditor does not have to give you notice before doing so and most times will not in fear that you will move the car to a different location. Individuals must abide by certain laws when they come to your home to repossess your vehicle.

Physical Repossession

When the individual comes to your home to repossess your vehicle, he cannot use physical violence or threats of physical violence against you in the process of physically repossessing the vehicle. Doing so would constitute a "breach of peace." The individual also may not remove your vehicle from a locked garage without permission from you. In some states, this law applies if your car is behind a locked fence or other type of locked barrier structure on your property.

Repossession Actions

The repossession company hired by your creditor can send an individual out to repossess your car at any time of the day or night. In many states, you do not have to be present at the time of the repossession. Typically, when a company plans to repossess your vehicle, they will notify your local police department. Giving this notification makes local authorities aware of the repossession in case you report your car as stolen.

Personal Items

The individual repossessing your car and your lender do not have a right to keep your personal property inside the vehicle at the time of repossession. If you are present at the time of repossession, the individual repossessing your car may allow you to retrieve your personal items before towing the car away. If this does not occur, the creditor must give you notice of when and where you can retrieve your items.

Identification

Many state laws do not require repossession companies to have any identifying signs on the tow trucks they use for repossessing vehicles. However, the person actually repossessing your car must have proof, such as a repossession agent license, of their identity. Some states also require that repossession companies display a state licensing number. Repossession laws vary by state so it is important that you check with your state's specific repossession laws.

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State of Florida Auto Repossesion Laws

An auto loan is a binding contract. If you fail to make the payments on your loan, the creditor reserves certain rights. Any contract you sign at an auto dealer specifically states that the title holder (the bank or finance company) reserves the right to recover the vehicle in the event of a default. The laws regulating the methods a creditor uses to recover the property vary by state, and Florida, like many states, puts few restrictions on the rights of the creditor if you fail to pay.

Seizure

A creditor is legally allowed to repossess your vehicle at any time without notice. They are also permitted to impose the fees for the retrieval added to the total unpaid balance of the loan. They may not "breach the peace" by using violence or threats of violence in recovering the vehicle.

Belongings

The items in the vehicle not considered permanent enhancements such as a stereo or luggage rack may not be sold to satisfy a portion of the unpaid debt. If you've left valuables in the car, you are permitted to recover them from the repossessing agency. If there is a dispute about missing items, you may be entitled to compensation if you can prove that the items were in the car at the time of the seizure. In a civil matter such as this, it is always best to contact an attorney.

Licensing

Recovery agents must apply for a class "E" recovery license from the state of Florida. Applicants must submit the required personal and employment information and proof of completion of a Recovery School training program.

Deficiency Judgment

When the creditor sells your car, they may sue you for the difference between the amount garnered in the sale and the total amount owed including the outstanding loan, collection fees, lien sale fees and recovery fees. This remainder is called a deficiency judgment.

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