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  1. #1
    Join Date
    Apr 2011

    Default Selling Car with Clear Title but Loan on Car

    My question involves a consumer law issue in the State of: NC

    Several months ago i bought a used car at a dealership. My financial situation has dramatically changed and have not been able to even make the first payment which I am past due 42 days on right now. NC DMV sent me a clear title with no lienholders on it. I have tried to sell the car privately for the last month as well as through the dealership I bought it at. The offered me 18K kess than I owe on it and can not come up with that kind of money. What would happen if I sold the car using the clear title and used that money to make payments and then just paid the debt off in the regular payments for the next 4 years?

  2. #2
    Join Date
    Jan 2006

    Default Re: Selling Car with Clear Title but Loan on Car

    what does your loan contract say? While it is typical they place a lien on the title, the fact is, all that is for is to prevent you from transferring title without their permission. Their security interest is created by the contract you have with them and more than likely, you are not allowed to sell the vehicle without either their permission or paying off the contract.

    So, what would happen if you sold the car? For a little while I suspect nothing would happen. Then, when you do not provide them proof of insurance as most likely is required in your contract, they may get a bit suspicious. If you never are in a position where you are forced to give up the car, you might get away with this. The downside is; if they ever did find out you sold the car, you would likely be liable for repaying the loan in full at that time. In very extreme situations, there might be a possibility of criminal actions against you, depending on a lot of facts not known here or even able to be determined until such a situation actually arose.

  3. #3
    Join Date
    Jan 2010
    New Jersey

    Default Re: Selling Car with Clear Title but Loan on Car

    Once you cancel insurance on the vehicle the insurance company will notify the loan company.

    The loan company will contact you asking for proof of insurance. If you don't give them proof that you have insurance on the vehicle, they will buy the insurance for you and put the price of your insurance into the amount you pay every month for the vehicle. In other words, instead of your monthly car payment being $350, it would now be $500. The extra $150 would be part of the insurance.

  4. #4
    Join Date
    May 2008

    Default Re: Selling Car with Clear Title but Loan on Car

    the dmv does make mistakes. several times they have sent out titles to customers when they were not supposed to. have you told the dealer you received this title? If you sell the car with the title and then default on this loan they can and most likely will charge you with fraud.

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