Transfer Fee Question from Cynthia
One of our readers, Cynthia, recently asked a question about who pays the transfer fee. While I don’t have the specifics of her transaction, I assume that Cynthia is referring to a private car sale transaction when the vehicle is financed.
Cynthia, if I am missing the mark on your question, please right back and we will work through it. Anyway, it is happening more and more often in this economy that people who bought a little more car than they can handle are trying to get out of there leases or loans. Since there isn’t a ton of free cash out there it is often desirable to find someone who is willing (and able) to take over the loan and the payments.
While this can be attractive, watch out for some pitfalls. Make sure that the lender is offering an unconditional release of the loan. For instance, if you are the seller of the vehicle, some lenders will transfer the loan to a buyer, but keep you on as a cosigner, without you really knowing about it. GMAC tried to do this to me several years ago. The trick is finding someone with equal or better credit than you have, then the lender is more likely to release you from all liability. If you have a 700 FICO and you try to sell you car to someone with a 600, the lender has no incentive to let a prime borrower go for a less prime one. Remember, you are obligated, not the bank, so they will protect their interest.
If I was selling (or buying) a vehicle, I would much prefer the buyer got their own loan and brought me a bank check than go through the transfer process. They can be strenuous. I have been close to 3 transfers, 2 leases and a loan. One didn’t go through at all, one was with BMW and was done in a matter of a week, but costed $450 in fees, and one with Toyota costed $50 but took months.
Do not under any circumstances take the vehicle, or turn over a vehicle, until the transfer is complete. You never know what may happen. Come to some agreement about how the car will be stored during the process.
Back to the question, so who pays the transfer fee? This should be a negotiable point of the purchase. My feeling is follow the golden rule – He or She who has the Gold shall make the Rules. The seller needs or wants to unload the vehicle, the buyer does not need to take it over, there are many out there to choose from. So I would say the seller should pay the transfer fee, unless the buyer feels compelled to do so. If I were in the position where I needed to unload the car, I would pay for the fee, a tank of gas, and a detail to get the deal done. Remember, those car payments bills keep coming, don’t miss an opportunity on either side of the transaction.
Well Cynthia, I hope this helped. I welcome any and all questions. Good Luck.
