This involves my daily driver car. A freind in my church would like to purchase it from me to "step down" a bit on his car. I would like to purchase his car from him in partial exchange. My car has a fair market value of around 6500, and his has a value of around 9500. Sounds simple enough, given him 3000 and fill out the titles, head off to the dmv for plates & title and we're down the road. However...

I own my car outright. His bank has his title and he still owes money on it. how does one go about this sort of transaction? Has anyone here ever done something like this? Or is it even smart to think about doing in the first place? Perhaps it's more troule than it's worth, and maybe he needs to take care of this through a dealer somehow? Fact is, I don't have to do anything - I can stay as I am, but what are the logistics of such a change?

Thanks for any input...

 

How much does he owe?

 

JUst go to his bank with him and pay it off... then pay him there at the back and take possesion of the title at the bank..

 

That's the stickey question I've not asked quite yet. If it's signifigantly more then the book value (which is likely) then it may be really hard for him to, say, drop $12k on the loan, and turn and sell the car to me for 9.5k. We've not agreed to a price, I'm just also not looking to loose my shirt - but I don't want him to either.

 

bump. Any other thoughts on this? Soemone must have dealt with this before?

 

IF he only owes book on his, his bank may be willing to take your cash and your title in exchange for his title. If he's upside down, he's going to have to come up with cash to get out of his loan.

 

ahhh....Church not withstanding......

not a good deal to get into. whatever is said or agreed to is moot.

bottom line is clear title for clear title legally. a bank would open an account for you to take over payments; not in your best interest. no matter what is promised by your friend.

I am sure an attorney will give you the same advice; never enter into an agreement you can't see all sides .....


an unscrupulous individual would stick you with the payments and say you agreed to do that to own his luxury car...yadayada

fences make good neighbors; handshakes make good friends (no money invovlved)

Heidi in NY

 

If you value the friendship, then skip the deal. Never do business with family, or friends. It's to easy to screw up things up. The Holidays are full of resentment then, instead of cheer. Friends are history. JMHO, Tony

 

Your friend is going to have to pay off the car, thats the only way you'll get a clear title. Don't get mixed up in someone owing money on a car you possess and somebody else owns, it's bad blood coming.

 

It seems like the bank would take your 3000 and your car and just do a collateral swap giving you a clear title to his car lein free and him your car and a $6500 new note. The $$ is all handled by the bank leaving no one holding the buck thats if he doesnt owe too much good luck let us know how it turns out.

 

That is possible, but not probable. The re-sale value on the car and the loan value on the car are two different things. The loan value will probably be about 80% of the stated re-sale value, which may or may not be a problem. This would depend on the other guy's credit history, relationship with the bank, and the age of the car the bank is looking to take as the new collateral. Most of the time, a bank, will have a tough time holding a car older than five years old, if the borrower has some shaky credit.

I agree with TotallyRad, the best way for all inolved is for this guy to pay off his loan, receive title from the bank, and then you all do your deal.

 

This is generally how I feel as well. Two times, I've sold cars to friends, but tht was only in a cash transaction with a clear title in hand, and even then i had a sit-down and let's be honest about this conversation first. Simple truth - I would have felt quite bad if something went wrong 5000 miles after they bought the car. Nothing bad ever occured from these two, but I still would rather not make a habit of it.

I'm going to talk the financial side of this over with him this week. It's a rare situation where his band instruments will not fit into his current car, and they will into mine. Also he just wants to remove a payment from his life as he anticipates a career change pending soon. There again, having this figured out will be best - he may just want to pay off his car, cut his losses, and trade it in to a dealer for something larger and less expensive.

I'll keep you all posted - thanks for the help, I'm not going to take on another's debt - even if (and especially because) they are a good friend.

 

96 that sounds like a good idea. Friends are hard to come by and good ones are even harder to come by.