hello guys, I have a friend who is selling his TSX and have this questions regarding it. He still makes the payment in his car and loaner bank owns the title. Now once he sell it, say the buyer pay cash. Does he have to turn the cash to the bank owning the title to transfer it to the new owner? or can he have the cash with him and continue making the payments?

If you have done similar thing, please let me know. Thanks!

Thanks!

 

I have not done what you're talking about, but I'm almost certain that the bank won't let go of the title until they have their money. A car loan is a 'secured' loan, ie there is some sort of physical collateral involved...the car itself. They will retain ownership of the car until you've discharged your debt to them or if you can't pay then they'll take the car back. If they transferred the title to someone else without you paying them off then they would no longer hold anything of value should you decide to stop paying them.

Or say for instance you decide to sell the car and you owe $30,000 on it still. If you sold it for $28,000...you'd still have to come up with $2,000 for the bank to release the title. Now you might be able to put that $2,000 on a credit card or take out another type of loan, but either way the bank will still want the full amount they're owed before they release ownership.

So to answer your question, you can do whatever you want with the cash, but the bank needs whatever money they're owed to release the title.

 

Only if they keep the car in their name, otherwise, they have to pay off the loan to get the title.

 

I've done this. It's a complete pain. Like katmai said, the bank won't release the title until you have paid the full amount you own. THis creates a problem, because the buyer is unlikely to just give you $xx,xxx to pay off the car and get the title, seeing how you could just run off with the money (not saying you would).

What I did was talked to a dealer that sold the car brand I was selling at the time (Mazda). The dealer acted as a middle man, effectively "buying" the Mazda off of me, then "selling" it to the seller for the price we agreed on. So If i owed 15,000 and sold it for 18,000, the dealer wrote me a check for $3,000, minus the $200 fee they charged me to do this. So basically the dealer did it for me for $200. The buyer then bought the car off the dealer for $18,000. That was the easiest solution I could find.

You could always do a bill of sale through an attorney, but that would be more expensive and a bigger pain in the ass.

 

Don't forget too as long as the car is in the original owner's name.... if the new owner is involved in an accident (especially fatal to a pedistrian etc.), or criminal activity with the vehicle there will be ramifications or at least a bunch of hassle for the original owner.

I personally would not retain any connection with the car if it was fully out of my possession.

 

correct.

so if you want the car:

you pay him.
he pays bank.
bank then releases title to him.
he then signs title over to you.
you then send the title in for transfer.
state sends you a new title.
finally the car is yours.

that is how it works if you want ownership of the car.

if you want to keep making payments on the loan, the car will not be
yours, it will be his still, under his name, under his loan, etc.
if you give him money to buy the car, and ask him to keep making
payments for you, expect to loose all of your money.

I personally wouldn't touch the car.
I won't buy a car if the title is not available for immediate transfer to me.

so...

take him to his bank.
pay his loan, and demand the bank give you the title on the spot.
have him sign it on the spot, then bring it to the DMV or wherever to
get it sent in and get your temporary title/application.
with that paper you can get it registered and insured and all of that
and be on your way with a beautiful TSX.

 

If it's that easy. Problem I ran into was Mazda held the title, and after they received payment it took 7-10 days for them to mail it out and me to receive it. Thats why I had to go the route stated in my above post.

 

well you used a dealership middle-man type of thing.
there is no discussion of that in this thread from the OP.
it is a person to person deal, no dealers or other people in the way.
no need to make it more complicated than it needs to be,
and no need to pay middlemen for no reason at all.

the only issue is if the bank doesn't have the title on site, if it
is at another branch or office or whatever. then you would wait on the
mail or whatever it is to get it in your hands.

 

I just did this with my honda (financed with honda). The buyer paid cash (cashiers check to be exact). I dont know what state you are in, but here in CA, most financial insitutions do not hold physical titles on site, most are "paperless titles", this is more convenient because when a loan is paid off, they just go online and release the title, which dmv releases and sends directly to the owner with no lienholder listed. Honda releases right away when the loan has been paid in full.The buyer was ok with this, so in the meantime we completed a DMV form 262 (vehicle/vessel transfer and reassignment form) and I went online and released my liability in the vehicle (important because if anything happens in the meantime, ie tickets, accidents, I could be held liable). It only took a little over a week to get the title. If you are not in CA, and financed with Honda, it is possible to get them to release the title directly to the new owner. Let me know if you have any more questions

 

^ oh nice.
I live in TN. and they are on the old system here.
paper titles, actually held at the bank who holds the loan.
and in Maine, where I moved from it was the same thing.

I like how you guys have it setup though, sounds pretty convenient.

 

Oh yeah, another point (about does he have to pay off the loan, or can he continue to make payments). Most financial insitutions will not allow you to sublet a car to another person (which is how they would most likely view this. Also, most insitutions require you to maintain full coverage insurance on the vehicle while they hold the lien, and if the buyer does not do this (depending on the financial institution), then they can/will force place insurance to cover thier interest in the loan. Trust me,I work in the Insurance Services dept at a Credit Union, and we do it all the time. And that insurance is NOT cheap, and does not cover you, only their interest in the vehicle. And the buyer might have a problem getting insurance in the vehicle if it is not in their name, some insurance companies want proof that the person has a financial interest in the vehicle. And like katmai said, the financial institution will not release their interest in the vehicle (or transfer ownership) unless the loan is paid in full.

 

we do have some titles on site at my work (credit union), because we have members who live out of state, or who's vehicles are titled in another state (we are near an air force base)

 

I know what you mean. My girlfriend was going to pay on a previous car I owned using my original loan...basically she was paying on my loan to use my car, but she couldn't get anyone to insure it since she didn't hold the title. The insurance company said there were problems with who to pay the money to if the car got into an accident...the owner of the car or the person insured. There are also other legal ramifications say if something illegal happened with the car...who's responsible etc. Basically, unless you own the car outright and hold the title, don't expect to be able to do 'odd' financial things with it.

 

I've actually done this with a friend's dad I was buying a car from. He was going to trade his car in for a new one, and I said I'd like to buy it. He was willing to sell it to me for whatever the dealer was gonna give him for trade. The dealer bought it from him then turned around and sold it to me for that exact amount. The advantage to this was that I was able to get a really low rate on a car loan from them. I already had an approved loan from an outside bank, and of course when they saw that they wanted to try and beat it. I said why not and they did...by a lot. And they didn't charge me a penny. They were already making money in the process!

 

That really sounds like a PITA. Here in Canada,you can just run a lien search. Then have a certified check made out to the seller and his/her bank. Seller HAS to take the check to the bank holding the lien. Bank gets what is owed to them and the seller gets the rest deposited in there account,or takes the left over cash.

 

When I sold the honda, it really wasnt that bad. I bought the tsx like 5 days after i sold the honda, received the title for the honda the same day i received the plates for the acrura (1 week after i bought the acura). Buyer was great, and he was happy as long as I kept him in the loop on status updates

 

thanks guys. looks like a really PITA.
I would advise my friend to hold onto his car.

 

I'm actually happy I sold mine the way I did, it really wasnt that bad, and if I hadnt, I wouldnt have the TSX now. I never would have gotten the $ that I did if I had traded the car in. And it was so much easier to walk on the lot with cash to put down instead of a trade in to worry about. Just tell your friend to do a little research, maybe call his lienholder, ask about their title releasing procedures (if they release right away, if they wait for the payment to clear, if they will only release to thier customer, or if they will release to the buyer), also, what happens if the buyer wants to finance?