Upside Down and Selling
Jay wants to know how to get rid of a car when he is upside down on it and it is worth less than what he owes.
QUESTION: Jay on Twitter wants to know how to get rid of a car when he is upside down on it and it is worth less than what he owes.
ANSWER: You have to pay the difference to get the title to be able to sign it over if I’m the car buyer. You have to pay whole amount to get the title from the bank.
Let’s say you owe $17,000 on the car and it is worth $14,000. That means you are $3,000 in the hole. In that case, you have to get the $3,000 from somewhere. If I give you $14,000 for the car, you can’t get the title for me if I’m the buyer. For that other $3,000, you have to do one of three things. Either save up the $3,000, borrow it from another bank, or the bank where you have the loan will let you sign a note for the difference.
In that last case, you would have a $3,000 unsecured loan with them and they give you a title. But we have to be able to get the title out of the vault to give to the buyer. You have to cover that $3,000 with one of those three methods.