How Much Would Refinancing Increase My Payoff Amount?

[MrMonkeyMoustache]

Basically, have a car that I need to sell, and it's through Ally. Because it's an online bank, I don't have a physical title, so obviously no one would be stupid enough to buy the car without the title in hand. Hence, I need to refinance it, so that I can actually hand the title over to the person upon purchase.

Currently, my payoff amount is 12.5k. The offers seem to indicate that I can only get about 11.5k for it. I can eat up that excess 1k. My fear, though, is that refinancing will make my payoff amount skyrocket. About how much may I expect it to rise?

It's a 2014 Civic, if that matters. I can eat up a bit more, but if it's like $16k, there's no way I can eat up that deficit.

I'm making about 10% more than I was when I first got the car, for what it's worth.

[MrMonkeyMoustache]

Now, how do KBB cash offers work? That's something I looked into. I know they'll give about $11k for it, which I could also eat the rest that I owed.

[shotgunwilly]

If you're trying to sell it why are you talking about re-financing?  You don't have to refinance the vehicle to sell.  Find a buyer, agree on the price.  The buyer sends your bank the money, you send the difference, and the bank sends the buyer the title.

I do not have experience using KBB instant cash offer, but usually, these type of offers are much lower than what the vehicle is worth.

[MrMonkeyMoustache]

It's not much lower. The KBB instant cash offer is 11k ($10,955, to be exact). Highest offer I've gotten is 11.5k. So not a gigantic difference, and one is obviously much easier than the other.

I'm thinking of refinancing because otherwise, I don't think I can sell my car. Why would someone just trust that they'd give me all that money, and in a few weeks, I'd deliver the title and car to them?

The problem is that my lender is an online lender (Ally). I need the title in-hand.

[Another Reader]

You only receive title when you pay off the loan.  Refinancing the loan to a local bank does not give you title that can be conveyed.

Selling a car in this situation is difficult.   Try CarMax and a couple of dealers to get a feel for wholesale value.  If you can live with that, it might be the simplest solution. 

[MrMonkeyMoustache]

Well, I was thinking that (after refinancing), if I let the bank know I intended to sell my car on a certain date, and that I'd be bringing a buyer over to pay off the loan, they'd have it shipped to the local branch. But I could be wrong. Either way, I know a dealership wouldn't shy away from the car just because the title isn't in-hand just yet. That's why I think it might be simpler, especially since I could try to trade it in at a Honda dealership and get an older Civic/Accord for a couple thousand more.

One problem I definitely don't want to have is that I either find a nice older Honda I like, but haven't sold my car yet, or I sold my car, but can't find another one to go to work/school.

Trading it in would allow both simultaneously.

[Another Reader]

And the dealer will take full advantage of your situation.  You will have to come up with extra money to pay off the loan plus a down payment on the next car.  Do you have that?  If not it costs a lot to roll your negative equity into your new loan.

Without knowing all the numbers, my inclination would be to keep the car you have and just pay off the loan as agreed.  Drive the car for many years and put money in savings for the day it has to be replaced.

[MrMonkeyMoustache]

The car really puts me in a bad financial situation. Terrible decision on my part. I'd only have to eat up $1,500 (difference between payoff amount and what they're willing to offer, assuming I can't negotiate a bit), and I'd outright buy another car for a couple thousand (looking at something in the '95-'00 range).

[shotgunwilly]

It's not much lower. The KBB instant cash offer is 11k ($10,955, to be exact). Highest offer I've gotten is 11.5k. So not a gigantic difference, and one is obviously much easier than the other.

I'm thinking of refinancing because otherwise, I don't think I can sell my car. Why would someone just trust that they'd give me all that money, and in a few weeks, I'd deliver the title and car to them?

The problem is that my lender is an online lender (Ally). I need the title in-hand.

They don't give you the money.  They give your bank the money.  Get in touch with someone at Ally and let them know what you are trying to do.  If your buyer is paying cash, then they will send Ally a check and you will pay the difference.  Ally will send them the title.  If your buyer is lending money from a bank to buy the car (most likely), then have both of your banks get in touch with each other. They will handle the transfer.

[MrMonkeyMoustache]

It's not much lower. The KBB instant cash offer is 11k ($10,955, to be exact). Highest offer I've gotten is 11.5k. So not a gigantic difference, and one is obviously much easier than the other.

I'm thinking of refinancing because otherwise, I don't think I can sell my car. Why would someone just trust that they'd give me all that money, and in a few weeks, I'd deliver the title and car to them?

The problem is that my lender is an online lender (Ally). I need the title in-hand.

They don't give you the money.  They give your bank the money.  Get in touch with someone at Ally and let them know what you are trying to do.  If your buyer is paying cash, then they will send Ally a check and you will pay the difference.  Ally will send them the title.  If your buyer is lending money from a bank to buy the car (most likely), then have both of your banks get in touch with each other. They will handle the transfer.

Oh, I know the money wouldn't go to me. That's why I think it's easier if I trade in, rather than trying to privately sell it. Dealerships understand the process. Private buyers don't.

[nottoolatetostart]

Can't you save more until you have money to payoff loan (just  paydown loan balance) and then save cash for older Honda?

Look at things in annual terms, not what it is costing you monthly to evaluate your trade. Plus your older car may require repairs initially depending on how well it was taken care of. If you are struggling with coming up $1k to refinance your car, I would just hang on to car so you are not making crazy interest payments. Plus you have to pay state taxes on your car purchase. That stuff adds up and it sounds like you don't have cash to do anything right now.

Or, refinance your current car for longer term ONLY IF  you just keep your car a very, very, very long time.

[MrMonkeyMoustache]

Can't you save more until you have money to payoff loan (just  paydown loan balance) and then save cash for older Honda?

Look at things in annual terms, not what it is costing you monthly to evaluate your trade. Plus your older car may require repairs initially depending on how well it was taken care of. If you are struggling with coming up $1k to refinance your car, I would just hang on to car so you are not making crazy interest payments. Plus you have to pay state taxes on your car purchase. That stuff adds up and it sounds like you don't have cash to do anything right now.

Or, refinance your current car for longer term ONLY IF  you just keep your car a very, very, very long time.

No, my current car payment and insurance pretty much prevent me from saving any significant amount of money. It's about 1/4 of what I bring in.

[marielle]

See what a dealership or Carmax will offer you as a fallback if you can't sell it. Try several dealerships, particularly larger ones. Some may not buy it if you're not trading it in, so call ahead.