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My wreck of a car might get towed away, and is posing other financial risks to me. What is the cheapest legal way to get rid of the car?

Further details:

I took out a loan in order to buy a car, and later I wrecked it; it is not worth more than its scrap value. Am I allowed to sell, give away, or otherwise dispose of a vehicle which still has a loan against its title? (Do I even 'own' my car if I bought it with an auto loan?)

People do not like the wreck being parked at the side of the road in a residential neighborhood, so I cannot simply 'walk away from it'.

I live in the state of Colorado, in the United States.

Possibly relevant section of my auto loan:

RETAIL INSTALLMENT CONTRACT

You give Us a security interest in: 1). The Vehicle and all parts or goods installed in it; 2). All money or goods received (proceeds) for the Vehicle; 3). All insurance, maintenance, service or other contracts We finance for You; and 4). All proceeds from insurance, maintenance, service, or other contracts We finance for You (this includes any refunds of premiums). This secures payment of all You owe on this Contract and in any transfer, renewal, extension or assignment of this Contract. It also secures Your other agreements in this Contract. You agree to have the certificate of title show our security interest (lien) in the Vehicle.

Ownership and Risk of Loss. You promise to pay Us all You owe under this Contract even if the vehicle is damaged, destroyed, or missing

You will not sell, or otherwise transfer any interest in the Vehicle on this Contract without our written permission.

If the Vehicle is lost or damaged, You agree that We can use any insurance settlement either to repair the Vehicle or apply to Your account balance.

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    I would check with the lender and/or insurance company about insurance, as AFAIK it's pretty much impossible to get a car loan unless you have collision & comprehensive insurance on it. Fault would not matter for C&C: your insurance company pays you. If another driver was at fault, they might try to recover from them/their insurance company, but that doesn't really affect you.
    – jamesqf
    Commented Nov 26, 2020 at 22:17
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    "I had liability insurance only." Does your lender know about this? Were you rightful in doing so?
    – glglgl
    Commented Nov 27, 2020 at 8:22
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    I’m voting to close this question because it's literally impossible to get an auto loan unless the vehicle has comprehensive insurance. The question is unfortunately totally unanswerable unless this is explained.
    – Fattie
    Commented Nov 27, 2020 at 13:31
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    @SamuelMuldoon - fair enough. FTR I have deleted my close vote. FWIW I suggest you click "edit" and put that info. Regarding your situation, good luck, and, to be totally blunt, I think you should consider just not paying it. It's incredibly bizarre / possibly illegal in your state that they sold you a loan with no insurance on the car. Here's a somewhat similar answer I wrote: money.stackexchange.com/a/132325/41786 Again, good luck!!!
    – Fattie
    Commented Nov 28, 2020 at 19:14
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    @SamuelMuldoon To clarify, is this question related to the last question you asked a month ago? money.stackexchange.com/questions/132030/… You say here that you have been paying monthly on this car 'for a while now', yet the question in October implies you were looking for insurance that hadn't yet been purchased.
    – Grade 'Eh' Bacon
    Commented Nov 30, 2020 at 13:53

1 Answer 1

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The relevant portion of the contract you quoted seems to be here:

You will not sell, or otherwise transfer any interest in the Vehicle on this Contract without our written permission.

So you don't seem to have the right to sell the vehicle without written permission of the lender (otherwise, someone could get a loan for a car, and the bank thinks risk is low because the car has value, but the borrower could sell the car and walk away with the extra cash, with the lender having a hard time to get repayment.

And here:

If the Vehicle is lost or damaged, You agree that We can use any insurance settlement either to repair the Vehicle or apply to Your account balance.

I assume insurance was in place on the vehicle, because it would be required by your loan contract - the question could be whether insurance would make a payout. In such a case, without seeing the remainder of the contract [and my not knowing Colorado law], it is unclear whether you are required to make immediate payment to the lender on having the car totalled, or if you must simply continue to make payments per the original contract terms.

In order to assist your making payment of the loan, the lender would possibly agree to allowing you to sell the vehicle to a scrap yard, though in doing so they may request that you pay off the rest of the loan in full.

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  • I had liability insurance only. The loan contract says that this should not be the case. "You must insure Yourself and US for the term of this Contract against loss of, or physical damage to, the Vehicle with a policy in Your name that is acceptable to Us. We must approve the type and amount of insurance." The lender never approved the type of insurance, even though the contract says that they must do so. The used car salesman was happy to take my $1,000 down-payment. He gave me the car, and signed a bunch of papers afterwards.
    – Michael Butler
    Commented Nov 28, 2020 at 19:22
  • The salesman was fairly unscrupulous. For example, he asked me to sign a contract for a $1,221 extended warrantee that I did not want. He told me to sign it after I had already made a $1,000 down-payment for the car. I had some hesitation, but the salesman acted like I had to buy the warrantee or else the car was not for sale.
    – Michael Butler
    Commented Nov 28, 2020 at 19:25
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    @SamuelMuldoon Sorry for your situation; you may find it beneficial to hire a lawyer to actually provide you options here, because the situation is quite odd, and there may be some steps you could still take to protect yourself.
    – Grade 'Eh' Bacon
    Commented Nov 30, 2020 at 13:51

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