Learn about selling a vehicle with a loan to a\u00a0private party\u00a0or dealership. When the bank, credit union, or finance company holds the title as funders of the loan, they are part owners of the car until it\u2019s paid off.<\/p>\n
We\u2019ll tell you what you need to do to\u00a0sell the car\u00a0when you still owe money on it and provide tips for completing the sale.<\/p>\n
Yes. You can still sell the vehicle if you owe money on a car loan. However, you need to go through your lender. You find out how much you owe and how to pay off the remaining balance to satisfy the loan and transfer the title to a new owner. Read on to see your steps.<\/p>\n
If you\u2019re selling your car with a loan, you\u2019ll want to check the value of your vehicle. Use the\u00a0valuation tool from our sister site Kelley Blue Book\u00a0to obtain the estimated range for trading it at a dealership or selling it to a private party. You can also ask for an\u00a0Instant Cash Offer\u00a0from a dealership. It\u2019s a no-obligation offer. With the offer or several in hand, it\u2019s easier to know where you stand.<\/p>\n
You\u2019ll also want to find out from your lender how much you owe on your vehicle and ask about any early termination fees for the loan. Once you know the loan payoff amount, you will want to inquire about what other steps you must take to own the car fully. See more on that in the\u00a0car value section below.<\/p>\n
At this point in the call with the lender, you\u2019ll need information for the selling scenarios below because each will be different.<\/p>\n
Trading in the car to a dealership<\/strong><\/p>\n Selling the car to a private owner<\/strong><\/p>\n Also see:<\/strong> One missed payment can lead to repossession of your car. Here\u2019s a guide on what to do if you\u2019re facing repo\u2014or if it happens.<\/p>\n Once you determine how much you owe, here\u2019s what you need to know about equity in the vehicle.<\/p>\n Positive equity<\/strong><\/p>\n If your vehicle is worth more than you owe for the payoff, you walk away with positive equity. For example, if you owe $3,000 and your vehicle\u2019s value is $25,000, your positive equity in the car is $22,000.<\/p>\n Check out:<\/strong>\u00a0The cars, trucks and SUVs with the best resale value<\/p>\n Negative equity<\/strong><\/p>\n If you owe more than your vehicle is worth, that\u2019s negative equity. You\u2019re upside down or underwater in the loan. For example, if your car\u2019s value is $25,000, but you owe $30,000, your negative equity in the vehicle is $5,000, and you still need to come up with this amount to settle the loan.<\/p>\n Related<\/strong>: Experts worry a perfect \u2018negative equity\u2019 storm is brewing for many car owners; here\u2019s what you can do if you\u2019re caught in it<\/p>\n Related:<\/strong> More drivers under 30 are falling behind on car payments, Fed says<\/p>\n Use these tips to help ease your mind during the sales process when selling a vehicle when you still owe money on a loan.<\/p>\n 1.\u00a0Use the buyer\u2019s money<\/strong><\/p>\n Here\u2019s the tricky part: Once you\u2019ve determined the payoff amount and sold the car, you\u2019ll have to use the buyer\u2019s money to pay off the note. Of course, you can use your own money, as well. However, paying off the car won\u2019t be possible for many sellers without the buyer\u2019s money.<\/p>\n The result is that some buyers won\u2019t be comfortable with this type of transaction. To ease a potential buyer\u2019s worry, use our\u00a0marketplace, where you can be assured of a secure transaction and safeguarded against fraud. If the buyer remains uneasy, you may need to use your own cash to pay off the loan \u2014 or worse yet, look for a different buyer.<\/p>\n The good news is that many banks will accept payment directly from the buyer. If in a positive equity situation, ask the buyer for two payments: one to your bank for the payoff amount and one to you for the remainder of your deal amount.<\/p>\n See<\/strong>:<\/strong> A guide to selling a car to a friend or family member<\/p>\n 2. Transfer the car title<\/strong><\/p>\n Once the buyer pays for the car and you pay off the loan, the car title becomes free and clear.<\/p>\n Most lenders provide two options: You can take the title or let the bank know where to send the title. If the buyer takes a loan on the car, your lender will need to send the title to the buyer\u2019s bank. Otherwise, the title can go directly to the buyer.<\/p>\n\n
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Know your equity<\/strong><\/h2>\n
Selling the car with positive equity<\/strong><\/h4>\n
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Selling the car with negative equity<\/strong><\/h4>\n
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Tips to sell a car with a loan<\/strong><\/h2>\n