Can you do short sale on the autoloan?

[mauiogg]

A friends can't afford a payment anymore, can she do a short sale?

Let say someone buy her car for $28k but she owe $36k.

 

Thanks.

[MarvBear]

no

[luiml73]

http://www.leaseguide.com/articles/affordcar.htm

 

An idea that might work - short sell

It's done with homes that are in danger of being foreclosed on and, to a lesser degree, done with car loans in danger of repossession. It applies to loans that are upside down — you owe more than the car is worth. It's call a short sell. It works best if your car loan is with a local bank or credit union, not so well with a carmaker's finance company such as GMAC or Ford Motor Credit. Here's how it works.

 

Explain to your bank why you will no longer be able to afford your car and that a repossession is unavoidable. Ask them to allow you to sell the car for a fair market price (check with www.kbb.com and www.nadaguides.com) and agree on a price. Even though the money doesn't fully cover your outstanding loan, the bank agrees to write off the balance and close the loan. In most cases, your credit is not affected. However, you may have to pay income tax on the write off amount since it is kind of gift from the bank. You would pay at the time you normally file your tax return.

 

Don't expect this tactic to work in all cases. The reason it can work is that, if you sell the car yourself instead of turning it in to the bank, the bank gets more money than if the car is repossessed and sold at a wholesale dealer auction.

[hurricanesfans27]

not going to happen. the bank would rather repo the collateral.

[NailTrail]

My CU accepted a short on my vehicle loan. Owed approx 25k, they took 17k and released the title. I was/am going through extreme financial hardship and explained my situation in detal to them. It can happen.

[mixer99]

I want to second that I saw it happen with a local credit union in Memphis, TN. A coworker of mine traded a GMC Yukon Denali for an Acura TL and they lowered the payoff/released the title for 5K less than was owed. It took a phone call and about 5 minutes of negotiating.

 

But, I think both of these stories have something in common...they were from CU.

[hoapres]

It certainly can't hurt to ask a lending institution regarding the possibility of doing a short sale on an auto loan. While I think the answer is likely to be no especially with the bigger lenders, every lender knows that the auction lots are filled up with repos. The prices at the auction have dropped a LOT over the past couple of years. A small CU is more likely to "cut losses" with regards to a short sale than a large bank.

[Lorenzo]

HSBC allowed me to do that a few years back.. they determined the price you post it for. Would not hurt to ask.

[bostonte]

Agreeing to release the title for less than full payoff does not necessarily mean they have forgiven the difference.