How to Sell a Car with a Loan

You can sell a financed car that still has debts – here’s how you can do that

Step 1: Determine Your Payoff Amount

It’s a good idea to start by checking your documentation for guidance and to find out exactly how much you owe. To make it official, obtain a payoff letter from the financing company. This official document outlines the payoff amount, a date when the amount remains accurate, and instructions for completing the payment, including accepted forms of payment or where to send the funds. You might not know exactly when you’ll sell your car, and interest fees can change your loan amount daily. With all the details, you won’t be surprised.

Step 2: Pay Off the Car Loan

If possible, the best thing you can do is pay off your loan before selling the car. That way, you’ll have a clear title that you can simply sign over to the buyer. This is more attractive to buyers, so you’ll have an easier time selling the car. If you want to sell a financed car without paying it off, getting the title will be a hassle, so some buyers may hesitate to buy.

Step 3: Provide a Clear Title

The sale is completed with the title transfer to the buyer and allows the buyer to register the car in their name. Transferring the title generally involves signing the back of the title to indicate that you are relinquishing ownership to the buyer. You may also need to provide the buyer with a bill of sale that includes the seller’s contact information, the date of sale, the sale price, the vehicle’s odometer reading, and signatures from both parties. The specific requirements for this vary from state to state. In Alaska, for example, the title serves as a bill of sale and gives the buyer everything they need to register the car in their name.

What to Do If You’re Selling to a Dealer

You can sell a financed car without paying it off or without paying it off by trading it in with a dealer or selling it to a private buyer.

What to Do If You’re Selling to a Private Buyer

You will often get a better price for your car if you sell it to a private buyer who wants to own and drive the car. You might even be able to sell it for more than its wholesale value.

You can also sell without a title if you’re in a hurry. If the buyer trusts you, they can take the car from you with the understanding that the title is not available yet. This is risky for the buyer as they may have trouble registering the car or face accusations of theft or repossession by law enforcement. However, if the buyer is willing and you document everything, you might be able to hand over the keys, pay off the loan with the sale proceeds, and sign over the title after the lien is released by the financing company.

Frequently Asked Questions

Can you sell a car without a title?

The title is proof of ownership, and in most cases, you cannot sell a vehicle without proof of ownership. If you’ve lost your title or it’s damaged or stolen, you need to replace it. If the vehicle has been scrapped, contact your state’s Department of Motor Vehicles for guidance on how to proceed. Some older vehicles may have a bill of sale instead of a title, which can also be used to sell a vehicle.

How to sell a car online?

To sell a car online, you’ll want to choose a reliable online platform that requires minimal fees. You’ll want to clean the car and take multiple pictures of the inside and outside. Be upfront in your listing if there are any repairs that need to be made. Decide how much you’ll sell your car for based on the Kelley Blue Book value and listings for the same make, model, and year of your vehicle. You may also want to use an escrow service to ensure that the transaction goes smoothly.

Source: https://www.thebalancemoney.com/sell-a-car-with-a-loan-315099