Is it possible to trade a car that someone has payments on for another car from a private owner? Is this a situation where the other person would pretty much take on the payments or just pay the full amount of the car loan or what its worth in Kelly Blue Book?
It's possible. You'll need to ask exactly what will happen of the loaning bank.
You cant rightfully make payments on something that you don't own. The lien needs to be satisfied. You can certainly trade cars, and the value of the car with the lien can be whatever you want...but at the end of the day, the lien needs to be satisfied, the title transferred, and if necessary a new lien established.
This sounds like it be more trouble than its worth. Maybe I will just keep the car a little longer and get the loan amount reduced down to closer to what the kbb value is so i'm not losing/under water on this.
The buyer's bank would work with the seller's bank in the event that they are using a loan to buy the car. The gist is that 1) the buyer and seller agree on a price, 2) the buyer's bank agrees to secure a loan in that amount, 3) the seller's bank agrees to transfer the title/lien to the buyer's bank, and 4) the buyer's bank sends the money to the seller's bank.This can be entertaining if the banks suck at communicating with each other as my friend who bought a Cobalt SS didn't get his title for over a month (he had the car and the bill of sale so all was well).
If the loan is underwater, the seller needs to work with their bank, who might release the lien (essentially unsecuring their loan) if a certain percentage is paid in cash (in this case, by the buyer). The seller is still on the hook for the total amount of the loan.
Invariably, the buyer will have a new loan (if they finance) and will never take over an existing loan. The original loan is between the seller and their bank: no one else.
Finally, nothing prevents the buyer and the seller from using the same bank, but smart buyers pick the best loan, not the most convenient.
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