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. Can I do this? I have someone already who is willing to do this. He will be handing me the $5000 that the loan company pays him after the deal is made, so there will be no actual transfer of car just transfer of title.

Public Comments

who not make it easier on yourself and if you have made payments faithfully contact the company you currently have the loan with about refinancing, or requesting a lower interest rate.
of course. there really is no legal issues. however, you will face the following issues: 1. will you really have a buyer for $5,000? 2. will that person really sell it back to you for $5,000? 3. is your car worth $5,000 (in the bank's eyes)? not bad for creative refinancing.
to me i would think it was fraud but i don't think its fully illegal check with your local law enforcment to find out for sure.
sure you can, but why did you get $5k in debt. Do you own a home? If yes get it that way. Or buy a cheaper car. BUT WHAT EVER YOU DO GET YOUR MONEY RIGHT
It's legal, but good luck finding an auto dealer who will buy your car for $5000 and then sell it back to you for the same price. Also, you'll have an up-front loan fee. So you're going to be paying more for your car.
Banks do this all day long, Dealers do this all day long, the mafia made this famous by laundering money its absoulutly legal
Yes. If the car is worth it, and your income justifies the debt. Go see your bank first, and ask if you would qualify for a $5000 loan, and what parameters they would have...ie loan to value...