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Negative equity not in my name

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Established Member

Negative equity not in my name

So I'm driving a vehicle owned by and making payments to my friend. I'd like to trade it in to get something in my name since my credit has drastically improved. A couple of dealers have turned me away saying I can't carry someone else's negative equity ($3400) into my new loan? A down payment of that much is not possible. I'm not understanding why this isn't possible since I'm basically agreeing to pay the loan and the bank would make interest of it anyway. Someone shed some light on this, please? 

Message 1 of 12
11 REPLIES 11
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Community Leader
Senior Contributor

Re: Negative equity not in my name

If the car is in your friends name you don't "own" it therefore it's not possible for you to trade it in. 

EXP 763 TU 793 EQ 734
Message 2 of 12
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Frequent Contributor

Re: Negative equity not in my name

I see two issues with the above described scenario,

 

A) Most captive lender's will not allow a "third-party" trade-in, meaning that they prohibit dealers from allowing a customer to trade-in a vehicle that is financed in someone else's name. If the vehicle is paid-for and has no lien, as long as the owner of the vehicle sign's off on the title it is okay, but not if there is a lien on the vehicle.

 

B) You would obviously have to have the person who own's the vehicle authorize you to trade it in and sign the title as seller, but if you look back at issue (A) if there is a lien on the vehicle in the owner's name, lender's prohibit this.

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Message 3 of 12
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Regular Contributor

Re: Negative equity not in my name

there's really no such thing as trading in a car..trading = selling the car to the dealer...you can't sell property you don't own.  

Message 4 of 12
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Established Member

Re: Negative equity not in my name

A little clarification: 

 

My friend is willingly going to sign over the vehicle to the dealership, I'm not trying to sell property without consent. 

 

And I'm still not understanding why this isn't a thing because if these are indeed 2 transactions, can't they just increase the trade-in value and compensate it by adding the same amount to the purchase price (not to exceed LTV limits) of the new vehicle so on paper it's as if there isn't any negative equity being carried over? That's what I'm misunderstanding because my friend is willing to sign the documents at the dealer to get rid of this vehicle. I feel like I'm just getting a runaround at the dealers I go to because they don't want to structure the deal how I mentioned. 

Message 5 of 12
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Valued Member

Re: Negative equity not in my name

I don't see any reputable dealer doing this. Maybe a sleazy buy here pay here will. It's not your vehicle. It's not your debt. Op may I ask did this friend finance this vehicle for you ? I'm asking because I'm trying to understand the fact that your friend is $3400 upside down and your essentially gonna bail them out and put yourself $3400 upside down by rolling this into a loan in your name. Under no circumstance whether it be a friend or family member, should you take on someone else's debt, in this case it's bad debt. I would give the friend the car back and go finance a car myself.
Message 6 of 12
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Regular Contributor

Re: Negative equity not in my name

www.lightstream.com is your friend.

 

just give them $3400 of the proceeds and go buy a car with the rest.

Message 7 of 12
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Frequent Contributor

Re: Negative equity not in my name

In my original reply, I answered your question. Dealer's have Dealer agreement's with their lender's, in the dealer agreement lender's outline your situation and prohibit it. Dealer's are not allowed to take third party trades in which money is owed, if the vehicle was free-and-clear with no lien, they would be able to trade for it. But since there is a lien on the vehicle, they aren't allowed to trade for the vehicle since it is not in your name per their agreement with the lienholder's.

 

Dealer's know how to structure deal's in order to make a deal look better on paper, but this doesn't alleviate the fact that the trade-in has a lien on it.

AMEX BCE ($39,500) CITI AAdvantage ($20,500) Region's Platinum Card ($14,400) Discover IT ($23,000) Macy's ($7,000) Chase FU ($10,000) Barclay's Aviator ($22,000) TU:778 EX: 781 EQ:791
Message 8 of 12
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New Contributor

Re: Negative equity not in my name


@adubz331 wrote:

So I'm driving a vehicle owned by and making payments to my friend. I'd like to trade it in to get something in my name since my credit has drastically improved. A couple of dealers have turned me away saying I can't carry someone else's negative equity ($3400) into my new loan? A down payment of that much is not possible. I'm not understanding why this isn't possible since I'm basically agreeing to pay the loan and the bank would make interest of it anyway. Someone shed some light on this, please? 


I did not know this was a potential problem. I even mentioned the fact that a car I am looking to trade was in both my name and a parent's name to a salesman. I am looking to lease a car in just my name. It seems crazy to me that a dealer would not take a trade because there were two co-borrowers on the lien on that vehicle when both have signed off on trading it.

25 years old

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Installment - FNCU - Secured $1500 paid/closed
Installment - City National New Jersey (Self Lender) - Secured orig. $1000, paid/closed
Installment - Lead Bank (Self Lender) - Secured orig. $545, cur. $370
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Message 9 of 12
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New Contributor

Re: Negative equity not in my name

I heard back from a manager at a luxury franchise dealership in Illinois. Granted, I am talking about a lease here, but this is what they said, "All we would need is the non-purchasing co-buyer to sign a Power Of Attorney."

25 years old

Wells Fargo Platinum - $1500
Chase Sapphire Preferred - $8500
Discover it® Card - $9600
AMEX EveryDay - $8000
Chase Freedom - $5000
Capital One QuicksilverOne - $1900
Barclaycard Apple Rewards - $600
Chase Slate - $1500
Capital One Platinum - $750

Lease - Audi Financial Services - $47,148 cur. balance, $55,063 orig. balance, buy rate money factor, MSRP $83,365
Auto Loan - orig. $20,617, paid/closed
Installment - FNCU - Secured $1500 paid/closed
Installment - City National New Jersey (Self Lender) - Secured orig. $1000, paid/closed
Installment - Lead Bank (Self Lender) - Secured orig. $545, cur. $370
Equifax - 729
TransUnion - 740
Experian - 752
Message 10 of 12
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