My wife and I have a 2008 Saturn Astra that we’re considering selling. However, what we owe on it (just under $15k for the payoff) is more than the KBB value of the car, which is between $10k and $11k.
We really just don’t need a second car now. We work at the same place, so we carpool. On days when we need to drive seperately, I take my motorcycle. It would be nice to not have to make this payment every month.
So, if we were to sell it for less than we owe, how would the bank handle that? Would we need to have the difference saved up before selling it?
I’m not a financing professional, but I’d say the bank will not release the title till the note is paid in full. So, yeah, you’ll need to cover the difference between what you owe and what you sell it for.
You are what is called “upside down” on your loan, and yes, you’ll have to make up the difference. There is no “how would the bank handle that.” They’ll handle it by keeping the title safely stored away until you pay off the loan in full.
If you can prove some sort of hardship, you could try negotiating with them to forgive part of it, but it doesn’t sound like that’s your situation.
I don’t recall the details but its my understanding that you don’t just walk away from a car loan. IIRC you can get royally screwed even more than you are if you are upside down on a loan. Lets say the fair market value is 10k. But you owe 15k. So, if you walk away from the loan you are in theory on the hook for 5k right? Buttt…the bank MAY sell that 10k car for fraction of that and you are on the hook for WAY more than 5k.
If you walk away, you don’t pay anything else. The bank get’s the car (which is their collateral). How else is the bank going to get another dime from you, if you don’t pay them. They can’t garnish your wages. It’s just like a home mortgage that you walk away from…which lots of people over the last few years have done.
See caveat in my first post, where I said, if you don’t care if your credit gets screwed.
Well, for starters, unless you declare bankruptcy, they can sue you. And they will sue you for what you owe them. If you sold the 15k car for 10k, gave them 10k and walked away, they will sue you for about 5k. If you walk away from the car and they sell it for a pitance at an auction, they will sue you for closer to 15k.
Yeah, they might not EVER be able to collect on that suit, but then again they might. Or, sometime in the near future you might want to actually settle that lawsuit for some reason.
If nothing else, why go on the record for “stealing” more than you absolutely have too?
IANA lawyer or debt or bankruptcy expert, but IMO just dropping the keys off so to speak is not a well thought out plan to say the least.
If a true expert comes here and says do exactly that, I’ll eat crow tonight. Until then, I think the OP needs to do a bit more research and pondering.
Yeah, that’s not my style. I’ve declared bankruptcy before, and have been working too hard at restoring my credit to screw it up badly again.
It looks like I’m stuck with this car. We can afford it, so it’s not a huge deal. Our lives would just be a bit better without the payment and insurance for it.
How easy is it to get a bank to let someone else just take over the payment for us? Is that even an option, or is it just a situation where we would have to get someone who we trust to pay us for the car every month?
Well, keep in mind that market value is an AVERAGE value. Some who trusts you and knows how well you have taken care of the car might be willing to pay a bit more than market value. Maybe you as the seller and they as the buyer could meet halfway on the difference between market value and what you owe?
Kelly Blue Book is pretty much lowball tripe, used by insurance adjustors and car salesmen to show you how little your car is “really worth”. Try the NADA books or Edmunds.
Are you sure of the payoff, or have you just added up the payments owed?
Most financing agreements say the car must be fully covered during the life of the loan. Based on episodes of the daily court shows, people do it anyway, just sayin is all. This is also, based on those same court shows mind you, when the unlicensed never do well you know will borrow (probably without asking ) and total it.
The best of a shitty situation may be finding someone you trust who is willing to pay the payments directly to you. Again based on any episode of any court show, this probably won’t work out well either.