Tips on Buying Cars: Title issues, auto insurance agent, insurance premiums

Question
I am selling my vehicle which still has a loan on it, the buyer doesn't have the cash to pay me the remainder of the balance is it possible for me as an individual to retain possession of the title till the vehicle is paid off?

Answer
If you keep the title your keeping ownership and financial liability for the car. Will you continue to pay your insurance premiums for this car you no longer drive but still own? Can the buyer obtain insurance on a vehicle they do not own? Do you want to be responsible if your car is involved in an accident or worse? Please discuss this with your auto insurance agent. If the car is damaged, stolen or totaled will the buyer continue to pay you until your paid in full? And, will you continue to pay your loan if the buyer stops paying you but keeps the car? Your credit and you financial health will be at great risk with this deal!

If the car is worth more than the outstanding balance I would advise finding a buyer who can afford the vehicle. If it's worth less than the loan you may need to lower the selling price. By holding the title your doing the buyer a great favor but taking on a huge risk. Current state laws may not allow the buyer to register or insure the car without a title in their name.

Whether or not its possible to retain the title is also a state issue and the states vary but as for the legal and financial issues I would seriously advise against this type of sale.

Good luck to you.