Selling an Upside-Down Car
My wife and I want to sell my car and buy something cheaper with better gas mileage. The problem is, we owe more that it is worth. Is there anything we can do?
You’re not alone. I’ve seen several situations in which a household’s budget included a ridiculously high car payment, with the explanation that they couldn’t possibly sell the car because they were “upside down” on the loan. Well, it is possible. I did it myself. You can too, if you have credit decent enough to qualify for credit card balance transfers (BTs) or cheap loans at a credit union at a non-ridiculous rate.
So here’s how to sell the upside-down car:
1) Read the fine print on the balance transfers to make sure you understand the interest rate and any applicable transfer fees. In most cases, paying a modest fee will be worthwhile to get rid of a monster car payment.
2) Use one Balance Transfer check or a combination of checks to pay off the car loan. Depending on which state you live in, you may have to wait a few weeks to get back the free-and-clear title to your car.
3) Sell the car. Do some research at http://www.kbb.com/ to set an appropriate price. You’ll usually get a better price placing a classified ad and selling to an individual rather than selling to a dealer.
4) Use some of the proceeds to buy a VERY CHEAP CAR. Again, buying from an individual is generally cheaper than buying from a dealer. In my opinion, the best buys are older, out-of-style cars with low mileage. Yes, they do exist if you’re willing to hunt for them–and swallow your pride. 
Of course, you’ll want to get an independent mechanic to check out the car first to make sure you’re not buying a lemon.
5) Use the rest of the proceeds to pay down the Credit Card balance. You’ll have some balance remaining, but that’s OK; you’re still less in debt than you were before.
6) Put the remaining debt in your overall payoff plan. Depending on the amount and the terms (is the rate for life, or does it expire) you may want to attack it first or wait until later.
Good luck!
