Frugal Friday: Does Car Debt Make It Harder to Sell a Car?

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jar of money on concrete by grassy lawn, with text overlay: Frugal Fridays.
We spent the greater part of last year pricing out used vehicles. Well, I should say hubs spent the greater part of last year pricing out used vehicles. What do I know?

We knew that it was only a matter of time before our minivan bit the dust and we wanted to be prepared. We saved the money and then waited.

One of the things we noticed about the car market was the great number of “third” vehicles up for sale. That is, the extra car. The weekend excursion car. People seem to be unloading these in an effort to get more cash or to get out from under a car loan.

Car Debt Hovers

Another thing we noticed was that a lot of people had loans to pay off. And sometimes a car might be worth more, but they were willing to take less because they were desperate for the cash and to get out of the loan. To my way of thinking, they were paying more in the first place because they financed their original purchase and then they “paid” again by selling it for less.

We ended up buying a used 9-passenger SUV. We got a pretty good deal on it because we were willing to wait until the owners paid off their loan and cleared the title. This took a few weeks, some red tape, and several signed documents back and forth, but we were (mostly) patient. That patience paid off in that we got a better price on the vehicle.

A car parked in a parking lot.Photo Source: Robert Couse-Baker

The buying experience made me wonder if having car debt makes it more difficult to sell a car you no longer want, need, or can afford said car. I am no expert. That has just been my observation. So you tell me:

Does having car debt make it harder to sell the car?

What do you think? What has been your experience? Tell us in the comments section and feel free to link up any money saving idea you got.

What do YOU do to save money?

Share your favorite money-saving ideas today. Leave a link to a post that shares some frugal wisdom. (Please no giveaways or deals posts. Teach us how to fish!)

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  1. I think selling when you still owe has *got* to make it harder to sell. For one thing, the seller knows you must have some desperation for money or you wouldn’t be selling something you’re still paying on. And that puts you at a disadvantage in the negotiation.

    And even if you don’t owe more than the car is worth, you have to go through the process of paying it off before you can sign over the title to title to someone else, and most buyers won’t be as patient or persistent as you guys were. So, as always, if you live within your means and only buy what you can afford, you’ll be in a better position all the way around! πŸ™‚

  2. Absolutely! Having debt on my car is making it much more difficult to get rid of. My husband and I just purchased a new-to-us SUV which we needed to fit all of our family members. My station wagon does technically fit us all but we’re very squished. We’d like to get rid of my car and purchase an inexpensive motorcycle for DH to use for his 4-miles commute to work. Right now we don’t drive my car, it just sits in the driveway and when I have things to do during the day I take him to work and do my errands and pick him up later. It’s helpful living so close to his work, but we’d rather he have his own transportation so no one is stuck anywhere.

    If I hadn’t completely financed my car back when I bought it four years ago we wouldn’t be in this situation. Part of the problem is that the car lost value faster than I could pay down the principle of my loan, but I really shouldn’t have bought a car that was more than I could afford anyway. Now we’re stuck with a car that is worth far less than what we owe on it. Luckily we’ve only got about 18 months til it’s paid off, and we’d like to start doubling payments soon to get it paid off in less than a year.

  3. I definitely think it makes it harder! I drive an 03 Kia that has needed a good bit of work (and still does). It will be paid off in about 8 months (unless we get a cash windfall and can pay it off sooner). we’re expecting kid #2, but I have several younger brothers who I cart around several times a week. So a minivan is our next goal. I’m hoping we can start saving more diligently, but with student loans looming over our heads, it’s hard to not send extra money there. Car debt is not what I want, at ALL, but it’s so hard to get out of the cycle when you need a car! Detroit can be a great place to live, except for the lack of public transportation. The motor city takes itself too seriously!

  4. Car debt definitely makes it harder to sell & get what you need! I listen to Dave Ramsey when I get a chance & totally want to learn from his wisdom! Our cars are old but paid off, and I hope that helps us down the road!!

    I linked up today & look forward to reading everybody else’s posts!! πŸ™‚

  5. Hi! I just found your Frugal Fridays, and thought I would share my link. I am looking for frugal field trip ideas as a way to help save money. It might take a little extra planning, but with a little creativity we have had fun doing free things as a family!
    Thank you for the linkup! πŸ™‚

  6. About 3 months after my husband and I got married we found out we were pregnant…and then later found out we were pregnant with twins! We had a knee jerk reaction and bought a car that would fit the twin stroller. We bought an Element…it only fits two kids in the back. We later moved to Memphis and I became pregnant again when the twins were only 9 months old. We had so much car debt that we couldn’t get rid of the new car. We held onto it until our youngest was almost a year and then had to borrow money from family to pay off the old car’s debt before we could get the used minivan we needed. Since this time we have learned to discuss/plan what to do with our money…..thanks to Dave Ramsey… and should be out of car debt next year. We will never buy new again and will pay cash, no exceptions!

  7. Debt totally makes you a desperate seller…so while it might make a great deal for the buyer – it’s probably a lot harder emotionally for the seller to let the car go for a loss.

    We’re expecting baby #3 and I’m dreading the day our small SUV no longer fits the family. I so don’t want to buy a new car – we’ll pay cash…but I’d way rather spend that cash on something else!

  8. A few years ago, prior to baby 3, we thought we’d trade in my still fairly new Outback for a van – we’d have more room, could transport kid friends, etc. I still owed a substantial amount on my current car. It was amazing the contortions that the salesman went through and we’d go home and think about it and to keep my payments where I needed them to be, I’d end up with yes more room but a car with more miles on it and a history I knew nothing about. Of course, I could have leased a brand new car – I was finally enlightened about why so many folks are driving around BEAUTIFUL shiny cars – leasing is short term less money but I knew not an option for our family – we’d pay a fortune to cover the interior wear and tear our cars get with dogs and kids! So, I put in the car seats and the boosters and we had the room across the sole back seat of our Outback and we just deal with it. No, we don’t have room to transport kid friends, but such is life – it makes it really easy to say no, I can’t help out because I need all 3 seats for my own kids! Do I wish we had a bigger car? Yes. Would I not LOVE my kids to have more separation in the car? YES YES oh YES, especially since the sounds of arguing might be muted from a 3rd row?? Do I wish I could push a button and have a mini van door slide open vs having folks beep at me while I buckle my youngest in the middle while leaning over one of the older kids? for sure (and go park somewhere else please)! Do I wish that we were replacing my now over 100k miles car? Yes, but can I live with my car, which has been reliable beyong compare? ABSOLUTELY – I LOVE LOVE LOVE my car, scratches, interior decorating by my kids included… We will be saving towards a “new to us” car since I worry a large repair bill or a new car will be a reality within the next year or so, and although we won’t have a “trade in”, we will be able to negotiate a car without having to factor in a loan payment that needs to be paid off – I think a much better place to negotiate from!

  9. Just linked above…#32. Sorry I didn’t put a title of the post next to my name. I’m still on a learning curve, this blogging world is still pretty new for me. Anyway, the post is about how I start preparing to shop with coupons to save BIG!

    Hope you stop by, and find it helpful! πŸ™‚

  10. Well, we are blessed that DH’s job provides a company car. So, unless we just have an errand that can’t wait, I usually wait for him to get home before running errands. This saves our personal cars, gas and wear and tear. So, our personal car gets very few miles on it, because almost everything we need is within a 10-15 mi radius at the most. Because of that our car has been paid off a long time, and the costs are very low, just normal maintenance.
    Thank you Lord, for the blessings!

  11. We are passionate Dave Ramsey followers. We no longer use credit or have credit card debt, however, we do have a car loan. We can not get out from under this loan because we owe more than it is worth. The perfect example of why you should not buy a new car. Ramsey folks say get rid of it and get a loan for the rest. Nuts. I have a loan already, I just need to pay it. I’m the perfect example of why you should do what you have done and not what I have done.

  12. Hi and thanks for sharing your space with us this friday! Yep, my husband is currently babying a 1988 cougar and paying a mechanic to fix it is a lot less than a car payment! Glad you got a great deal! I saved money this week by NOT going to the store to by basil when mine failed and I had a craving for Pesto-I made Mark Bittman’s Arugula pesto in order to make do, but it turned out GREAT! πŸ™‚ [email protected]

  13. I’m thinking maybe God led you to post about buying cars this week. We JUST got our new (to us) car from the shop after we got a fantastic deal on it. We made a quick decision to buy it after our Saturn received a death sentence, and thanks to Dave Ramsey’s teachings (and a timely bonus from work), this one car family was able to buy it with cash.
    Yay, God. It’s thanks to Him too.

  14. Interesting post. We just bought a new-to-us minivan and while looking around on Craigslist, I encountered a number of people who were asking “too much” for the car. As in, well *over* the Blue Book value. When I pointed this out (politely), thinking maybe they just got confused as to what model they meant to put in or something, I always got the same answer: “Well, that’s how much we owe on the van and we can’t afford to sell it for less than that.” I was kinda flabbergasted.

    Like you, we ended up with a great van thanks to patience and having the cash in hand. What a good feeling!

  15. I would definitely agree with you! It was so nice a couple years ago, when we were selling our car, that we didn’t have the pressure of meeting a loan payment. We were able to take our time negotiating a fair price.


  16. So ironic that you posted this today πŸ™‚ We have been WITHOUT a car for almost two years. Long story short, we walked everywhere (about a mile to store) and my hubby commuted as many hours each day as he did work. He rode the bus and his bike to get to and from. We finally bought a car today and paid for it in cash. πŸ™‚ πŸ™‚ For the five years we’ve been married, we have never had a car payment. I honestly do not think we would have made it if we did have a car payment.