Auto Title Loan Question Regarding Collateral

[Anonymous]

I went to my local CU from whom I've had my original car loan and two other nonsecure personal loans with, and I asked for a third personal loan for a move I was making. They know my perfect payment history and early payoffs on the other loans. I easily get approved for 3800. The loan officer asks if I want it unsecured like the other 3 I had paid off or use my car as collateral to get a really low APR (7.75%...is that low for this situation that's turned out to be called an auto title loan. I said okay to the lower APR...the loan officer didn't tell me the difference in APR from a secured to an unsecured. But now I want to sell the car and pay off the remainder of the loan. Can I privately sell the car? Cash the check and pay off the loan? If that's illegal, from what I've read you can't sell a car that's being used as collateral? And not even if I am paying off the loan with the sell?? If anyone can shed some light as to if I can sell and pay the loan, or can I simply go to the bank and have them switch the APR to what it would've been if I chose his other option of the unsecured loan. I appreciate all responses!

[andre181]

First, since its a CU, they might switch the loan from secured to unsecured if you ask, whereas bigger bank would most likely say no. And it can't hurt to ask anyway so its worth a try. 

Second, laws vary by state so its hard for us to say whether its illegal for you to sell it while being held as collateral without knowing where you live. 

Where I live, in Nebraska, it is not illegal BUT its very hard to do so because you cannot sign the title over to the buyer while it has a lien on it. If the buyer is willing to accept the promise that if he pays you, you will pay the bank and remove the lien and sign over the title after the lien is removed, then its no problem. But a smart buyer wouldn't fully pay for a car without receiving the free and clear title immediately, because without the title being signed over to the buyer, a dishonest seller report the car stolen or reposess the car.

And if you did find a buyer who was willing to wait for the title, but was driving the car in the meantime and hits and kills someone, because you are still the legal owner of the car, you could be liable.

[Anonymous]

Andre181...I reside in Nebraska as well, and thank you so much for the reply. I was assuming if I went to the CU that provided the loan and inquired about the switch to unsecured, they would be able to discuss that with me. I assumed if they gave me the option of a personal unsecured OR a loan with the free and clear paid off car as collateral, they shouldn't have any qualms with changing the agreement to pay at whatever APR the unsecured loan would be at and in turn raise the monthly payment possibly. I would also be guaranteeing them a quick payoff of the loan since I have a few offers already. It currently is 7.75% for 36 months and I am not even 6 months in and paying it off. This CU has been really great to work with...considering I was a working resident of its county when I had three other loans and they still financed this one after a move out. I am looking forward to not having a car oddly enough and will be excited to pay the loan and be free of all debt! No more gas, maintenance, insurance, tags, but an increase in health and freedom most don't associate with being carless. Thanks again!

[andre181]

Just a question, is it SAC FCU?

They are pretty flexible and I think they would work with you.

[Anonymous]

No. This CU is just in a small town where I used to live. I am now living in one of the two BIG cities. Ha. I am afraid that's all that can be divulged!

[andre181]

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@Anonymous wrote:
No. This CU is just in a small town where I used to live. I am now living in one of the two BIG cities. Ha. I am afraid that's all that can be divulged!

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Haha. I understand. However, as a native of one of those 2 big cities, I can imagine which one it is based on the fact that you are getting rid of your car. I couldn't imagine living in the other without a car.

I now live in a small town and love it but can't wait to move back home.

[webhopper]

Congrats on dumping the car. I drove a car for 3 years and my employer took care of gas, maintenance, and insurance, tags, etc

It was awesome. Now I have to take care of those things and it sucks!

[Shogun]

I drive 120 miles round trip to work...  So a car is kind of a given.