I imagined this would be an easy question, but neither myself or
friends seem to have the answer so turning here.
I own a car that has $17,000 still owing on the loan and I would like
to sell it to a private party (i.e. not take it to a dealership to
trade in, but instead receive cash equal to the amount owing so I can
pay off the loan).
What is the "standard" practise for doing so.  My main concern is as
follows: the bank (not local) will not release the title until they
receive the payoff amount.  Conversely, a seller wouldn't be smart to
hand over the $17,000 if they did not have the title.  I would prefer
not to "float" $17,000 to get the title (for obvious reasons -- and
since this would not be an option for most people, it's obviously not
how it's done).
Spefics to this question:
1. What is the "standard" practise?
2. If there is a "standard", are their forms or documents related to
that?
3. Any other tips/tricks from those who have done it before.
Thanks in advance.

---

Clarification of Question by seattle_cameron-ga on 08 Sep 2002 13:32 PDT

Note: I am *not* looking for ways (websites, etc.) to sell my car.

The process that protects buyer and seller is an escrow service.  The
buyer receives assurances that all liens are paid and that title is
clear.  Your vehicle certificate of title for Washington shows the
'lienholder'.  As seller, you get funds guaranteed.

Though none of my private auto sales have involved escrow, I have done
it with aircraft and the escrow companies can speed the process
greatly -- especially if wire transfers are used instead of waiting 7
to 10 days for checks to clear.  Though your bank may charge $20-$30
for a wire transfer, it enables you to deliver the car as soon as
funds are deposited.  The buyer usually pays escrow fees and sales
taxes.

Here's how the processes typically work:
·	Escrow service receives money from the buyer or buyer's lender. 
·	If the buyer is using a loan, the buyer's lender sends in a lien
document.
·	The seller provides a bill of sale for the car.
·	The seller's lender, if one, sends a release of lien. 
·	All parties instructions to escrow service standard form that
directs the service to file documents and release funds when all is in
order.

Good introduction to the process through a classic car site here,
though they don't mention what happens at either end when a bank loan
is involved:
http://www.buyclassiccars.com/escrow.asp

Here are a couple of on-line sites that do escrow work and both have
good descriptions of the process.  Make sure you understand what wire
transfer fees are (to and from your bank) for each transaction:

Vehicle Escrow charges $450 flat rate:
http://www.vehicleescrow.com/  

Escrow.com, 0.85-1%:
http://www.escrow.com/solutions/vehicle/index.asp

Washington has a good overview of requirements in the sale of a car at
the Department of Licensing site here:
http://www.dol.wa.gov/vs/buy-faq.htm

Here's a good overview of what needs be in a bill-of-sale for cars on
the Consumer Guide site:
http://auto.consumerguide.com/auto/buying-guides/bill-of-sale-form.cfm?aid=4107

Consumers Union does an excellent job covering auto sales or purchases
and makes several good recommendations in its on-line site:
http://www.consumerreports.org/main/detailv2.jsp?CONTENT%3C%3Ecnt_id=113373&FOLDER%3C%3Efolder_id=113261&bmUID=1031518055213

Surprisingly, they are silent on the escrow process.

There were a couple of surprises for me in doing this research:  AAA
Washington apparently doesn't offer an escrow service -- though you
may want to contact them directly instead of relying on their website.

Plus, the state of Washington in has a misspelling in two different
places on my vehicle title, referring to "leinholder."

Good luck with the process!

couldn't have asked for more complete service.

An alternative is for the seller to obtain a pay-off price for the car
loan. The loan company will usually provide a value that is good for
about a week. The buyer pays the seller the difference between the
pay-off and the purchase price, then sends a cashier's check for the
balance directly to the lien holder. The seller is protected by the
fact that the buyer cannot register the car until the lien is
satisfied. In my experience, lenders are very cooperative with this
process.

The catch is, no matter how you do this, there is a delay between the
time the car is purchased and the time the buyer can get clear title.
This can make it difficult to find a buyer for full value.