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Re: Car loan questions [Re: pbm] #5351984 02/16/20 05:57 PM
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NO2 Offline
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Dealers make money on financing, sometimes as much or more than the vehicle. That is why you sometimes see higher interest rates vs a credit union. Promotional financing from the manufacturer is usually the best deal ; just make sure to take the longest term available at the lowest interest rate they offer if it is well below market. That is usually 36 mo or so.

Re: Car loan questions [Re: hallstevenson] #5352041 02/16/20 07:02 PM
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WagonWheel Offline
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Originally Posted by hallstevenson
Originally Posted by WagonWheel
Mentioned the borrower can still legally be liable for any amount that the lender can’t recover by reselling the car.

Something is missing there. How do you sell a car that you don't hold the title (free and clear) to ? I mean, you can take the person's money and you can 'give' them the car but they won't own it if you still owe money on the loan for it.


I’m not sure I understand your question. The lender holds the title (lien) until the debt is paid off, but takes ownership once the borrower defaults. In most states the lender must pay the borrower if they resell the car for more than owed - minus fees. But if there is a balance, the borrower is still liable.


2003 Honda Accord 2.4L 5AT - 153k miles
2006 Honda Odyssey 3.5L EX-L 127k miles (S-VCM)
Re: Car loan questions [Re: hallstevenson] #5352159 02/16/20 09:18 PM
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Originally Posted by hallstevenson
How does it typically work on car loans (I guess for any loans) where the dealer pads the interest rate ? As I mentioned above, a lender offers 5% interest and the dealer tells the prospective buyer "we can get you financed at only 7.5%, sign here", when does the dealer get that 2.5% "extra", month by month (I doubt) or in a lump sum ?


In mortgages, if you could get the borrower to agree to a higher rate, you got paid a higher rate for the loan. You'd sometimes use that money to pay off their closing costs so on mortgages, people sometimes focus on just the interest rate when it's the fees and interest rate that really matter. You can have a higher interest rate and low fees/no fees or a lower interest rate and more fees. You got paid points on the loan depending on what the interest rate was. Say you normally make 2 points on the loan, if the interest rate is higher, you could get 3 points or 2.5 points or whatever. They would just have clawback provisions where you didn't get the money if it was paid off within a couple months. But if you told the borrowers that and they liked you, they wouldn't refi it or pay it off til after your clawback period had expired.

Originally Posted by hallstevenson
Originally Posted by WagonWheel
Mentioned the borrower can still legally be liable for any amount that the lender can’t recover by reselling the car.

Something is missing there. How do you sell a car that you don't hold the title (free and clear) to ? I mean, you can take the person's money and you can 'give' them the car but they won't own it if you still owe money on the loan for it.


Your question doesn't really make sense in the sense in the flow of the thread. The dealer just tells the buyer not to make a payment on his old car so it gets repossessed. Dealer doesn't take it in trade and the borrower doesn't sell the car, the bank takes it back. No selling takes place by either dealer or borrower, the bank takes it back. It's a bad way to go because the back typically tacks on repossession charges, late fees, etc so that the borrower is worse off than if they just tried to sell it on their own even if it was upside down. It's never a good idea to just let the bank take it unless you're going to declare bankruptcy anyway.

Re: Car loan questions [Re: WagonWheel] #5352171 02/16/20 09:28 PM
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hallstevenson Offline
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Originally Posted by WagonWheel
The lender holds the title (lien) until the debt is paid off, but takes ownership once the borrower defaults. In most states the lender must pay the borrower if they resell the car for more than owed - minus fees. But if there is a balance, the borrower is still liable.

If I have a loan on a car and "sell" it to someone, what title can I give them ? In Ohio, you get a copy of the title, on white paper, and it's only used for registering the vehicle (to get plates). I can sell the car, hand them a copy of that title, but they'll never get it transferred to them without the real title. One could sell the car, send the payoff amount to the lender, and wait for them to process it to get the real title sent. Then the buyer could transfer the title into their name. In a private sale, that's just not gonna happen unless the buyer and seller know each other and accept this arrangement.

Now, if I am buying a car through a dealer and owe money, they're generally okay with this as long as the new lender will roll the payoff cost into the new loan. In fact, that's advantageous to the dealer as they finance even more and get more kickback money from the new lender. They have to sit on that trade-in until the original lender gets their money and sends them the title too but to a dealer, that's probably routine.

Re: Car loan questions [Re: Kira] #5352175 02/16/20 09:33 PM
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Originally Posted by Kira
72 months is way too long.
Finance people cite car loan lives of 5, 6 and 7 years (60, 72 and 84 months) as a bad indicator one's economic health.
And, more and more, people are opting for these terms.
Not good.


You are OK with 72 months on a new car-that's well within 100,000 miles at the average miles per year. Used is another story.

Re: Car loan questions [Re: Wolf359] #5352182 02/16/20 09:35 PM
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hallstevenson Offline
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Originally Posted by Wolf359
Your question doesn't really make sense in the sense in the flow of the thread.

I misunderstood part of it. I didn't realize they meant the lender selling the car after they had repossessed it, as in there was $5000 outstanding on the loan and they sold it for $4000, they still want the "missing" $1000. Titles, new buyers, etc aren't a factor in that case.

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