Promissory Note

[Tagfarmer]

Our Credit Union can take our name off the title of a vehicle we are thinking of selling. If we give this individual a promissory note, with our names removed from the title, is our legal liability then removed from the vehicle. (I am not talking about the financial responsibility). If this person gets in an accident, gets drunk etc. We want to make sure we are covered. Thank You. My state is Michigan

[jk]

How can the credit union remove your name from the title?

The only way that I am aware of that that could happen is if they repossessed the car and took title to it themselves. If so, then the car is no longer yours to do anything with.

the rest of your question makes no sense to me. Why would you be giving somebody a promissory note and the vehicle?

[Tagfarmer]

My credit Union is willing to take our name off the title...We are still liable for the debt of course, But they said they would do a transfer of title. I have been a credit union member with them for 30 years have a 820 credit rating, and they know me and are not worried about me. I am just concerned if they are any liabilities, from our stand point, to go this route, should we just make the person get their own loan

[Mr. Knowitall]

Your credit union will only take your name off of the title if you pay off the loan. It sounds like you would be taking out an unsecured loan to pay off the secured loan (the car loan) so you can sell the car. To avoid the consequence of Michigan's owner liability statute, you need to transfer title to the buyer, but it's a rare buyer (and even more rarely an honest buyer) who doesn't want title.

Why would you want to borrow money to pay off the loan, then give this person a loan to buy your car? Why not have him get a loan, and use the purchase price to pay off (or mostly pay off, depending on the amounts) your car loan?

[Tagfarmer]

They are willing to transfer the title with the current loan in place, I just wanted to know if we had any liability with our name still attached to the loan. Not the vehicle. Thanks

[Mr. Knowitall]

You are 100% liable for the loan, which you will probably end up eating when the buyer doesn't pay you. When that happens, come back here so we can tell you how low your chances are of recovering the money.