Overhaulin'

Should I sell a car with a lien to purchase a newer car?

I have 2 cars that now both have a lien on them. A 2000 Chevy Malibu and a 2003 Buick Le Sabre. We were on hard times and had to borrow a personal loan from the bank at one time, thus the Malibu went on the lien too. My question is if I do sell the cars, do you think it would be more profitable by selling both to pay off the lien and give me a down payment on another car or should I just pay this off first before considering a new car? Also, how does that process work?

Public Comments

1. I did not know you could sell a car that has a lien on it. Isn't that the purpose of a lien?
2. You would be better off selling both cars and paying off the lien and putting a down payment on another car with the balance. Anytime you are paying interest try to pay that debt off first. Learn to negotiate interest rates. Shop smart by looking at the rate of interest you are paying. If you are paying 18%-20% it will take years to pay off a loan. The more you can pay down on a car or home the better off you will be. Interest is like throwing money out the window. Money that YOU could be using instead of a lending institution or care dealership.
3. If your Malibu and Buick are the collateral used for your personal loan, you have to pay off that loan in full to get the titles back from the bank. You can't trade them in because you don't own them. The bank does until you've satisfy the terms of your loan. If the Buick is with another lender, it's still bad planning to trade it in and greatly increase your monthly payments. You'll have to make more at work to cover the difference. Otherwise your debt-to-income ratio will be out of whack (your gross monthly pay vs. all your monthly payments going out each month, including rent, mortgage, insurance, etc.) Pay off the personal loan first. Then trade in both cars for one, if you don't need two cars. That's the smartest and safest way to go. You were caught between a rock and hard place once before. Don't put yourself there again.