Overhaulin' - Is it legal to sell my car for cash then get a loan to buy it back?

Is it legal to sell my car for cash then get a loan to buy it back?

If I sell my car for $5000, I could pay off a credit card that has 21% interest rate. Then I would get a loan for $5000 to buy back the car. The loan would have a finance charge of 9% or so.

Public Comments

There is no law that would stop you from doing this. And, actually, it would be smart to consider this option. Why not check with a local credit union and see it you can just get a straight loan on the car for the amount you need. You may be able to get an even better rate. Also it should be against the law to pay 21% apr on a credit card. That's awful.
Use your car as collateral for a loan, provided that the car is actually work 5k. My husband did this years ago when he wanted to take out a personal loan to purchase something, but didn't qualify based on just his credit score. You'll have a better chance of getting a loan and at a lower interest rate w/ collateral than w/o. Also talk to the credit card company and see if you can negotiate the interest rate down and some of the balance (fees and such). They might be willing to do that if you are very behind and they are about to send the account to collections.
It is legal but an expensive way to get the loan. Each sale would require the buyer to pay sales tax, registration fees, etc. If the car is not too old and has less than 100,000 miles, you can get a loan directly using the car as security for the loan. It should be easy to get 80% of the trade-in value from your bank or credit union. This may not get you the full $5000 but will save you a lot of money in state taxes and fees.
Why go through all of that trouble when you can just refinance? Go to a credit union, give them your current loan information, and see if they will quote you a lower APR so you can save money.
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of course. there really is no legal issues. however, you will face the following issues: I've had good luck here... http://auto.deal4-you.com Good luck