Overhaulin'

upside down with a car loan and do not want a vehicle at all?

my family member is upside down with her car loan. she wants to get rid of the car and does not want another vehicle as she is going to use public transportation. how does she get rid of this car?

Public Comments

1. transfer or co sign the car/loan to someone else if they're willing to take over. try posting on sites like cragslist asking people to take it. another option is turn the car into the dealership. they will take it and sell it. any difference owed, you will have to pay the reminder.
2. I need to address the HORRIBLE advice someone else posted. (And sorry, "you" in the paragraphs below means your family member or whoever you're referring to.) First off, you can't just "transfer" a loan to someone else. The person you are selling the car to has to qualify for their own loan... and the car you are selling has to be "in-line" with the loan value. If you are upside-down already, the bank isn't going to allow someone else to purchase the car for you at an overallowance. For example, if the car is worth $10K, but you owe $15K, the bank isn't going to allow the buyer to get a loan for 150% over its value. Also, you don't just have someone "take over payments". Even if you have them sign a contract, the original contract with the lender still supercedes everything. And, keep in mind, you still have to keep the car registered and insured in YOUR name. If the car is wrecked, it's on your shoulders. If a payment is missed to the lender, it's still your responsibility. These Craigslist handshake deals begging folks to take over payments are all illegal to begin with. Add to that, if the lender finds out that someone else is trying to take ownership of the vehicle, they can and will repo the car. It's a direct violation of the contract. The other advice, "just turn it back in to the dealer", is bogus as well. That's called a "voluntary repossession" and carries the same stiff penalties as the one involving tow trucks at 3AM. The car is sold at auction, you're presented with a bill for the difference between what's owed and what it brought at the auction. If you cannot pay or settle that amount, you can and will be taken to court. The court can render a judgment against you and possibly garnish wages iff your state allows it. And, naturally, your credit is destroyed. Folks who are way upside-down have two choices: 1) Keep paying on the loan, double-paying when possible. 2) Sell the vehicle, making sure to get as much as possible... and pay the difference owed to the bank in cash. If they are not that far upside-down (maybe a thousand or two), try the private sale route.
3. she sells it and pays the difference between the sell price and the loan balance....or, if she's not TOO upside-down, she might be able to sign a note for the shortage. she should call the lender and ask abnout this. remind here that she will not be buiyng gas or paying for insurance, so the money that would otherwise be spent for those can go towards the note.