How to Sell a Car with a Loan

Some people have the ability to buy a brand new car outright, but the majority of consumers have to finance at least some portion of the purchase price. Getting an auto loan is quite easy and extremely common, but what happens when you still owe money on that loan but need to sell the vehicle? The good news is that it’s absolutely possible to sell a car with a loan, but there are a few things you’ll want to keep in mind.

Determine Your Car's Actual Value

Before you do anything, take the time to research the actual value for your car. The internet is full of resources to help you in this area, but it’s important to remember that value is closely tied to condition, mileage, options, and configuration, so you’ll want to be careful to enter information as accurately as possible.

It’s also a good idea to remain as emotionally detached from this process as possible. You can easily get attached to your car after daily driving it for years, but the buyer isn’t going to have the same feelings and won’t want to pay a premium because you’re sad to see it go.

While you can take your car to a dealership for an appraisal, there are plenty of reasons why that could be an annoying experience. First, dealers don’t quote retail prices when they evaluate a vehicle, since they’re looking to make a profit on reselling it. You’re likely to get a trade-in value or cash offer, which will be lower than it should be to allow room for the dealer to make money. At the same time, visiting a car dealership when you’re not looking to buy a new car can lead to unwanted phone calls and emails from sales people.

Figure Out Actual Pay-Off Amount

Some lenders will show your payoff amount in the basic account information, or in a monthly statement, but some require you to call for the specific amount. This is sometimes called the “ten-day payoff quote,” which is the amount you’ll need to pay the lender to settle the loan. The quote will also include interest, any fees, and other charges that the lender tacks on.

Paying off your loan is the best financial move when you want to sell your car. It might not be feasible for many consumers. If possible, try to pay off your loan before you sell your car.

Figure Out How To Sell

Once you know the value and what you owe on the car, you can proceed with the sale. Where and how you decide to sell the car has a big impact on the amount you’ll get and the experience you’ll have. Selling to a dealer is easy, but as we noted, you’re not going to get the most for your sale. Selling to an individual is more involved and takes more effort, but you can get more money in the end.

Read more on How to Sell a Car here.

Selling to a Dealer

Most car dealers buy cars, even if the person selling has no intention of buying a new one. It’s one way for the dealership to pick up new inventory, but you’re not going to get the best price using this route. Dealers have tons of overhead expenses like rent and facilities maintenance, salaries, and taxes, so they’re looking to make as much money on every sale as possible. So, while you’re likely to get a quick offer and have someone else deal with the paperwork and hassle, you’re also going to get a lot less for your sale.

If you still have a loan on your car, selling to a dealer is one of the easiest ways to move forward. Dealerships need inventory and will offer to pay off your loan, if you purchase your next vehicle from them. Be aware that this is not the best move financially, as the dealer will take the pay off amount and roll it into the next vehicle purchase.

Another benefit to selling your car to a dealer is time. This method is by far the most convenient way to sell your car. If time and convenience are more important than the purchase price, selling to a dealer is for you.

Read more on How to Sell Your Car to a Dealer here.

Selling to a Private Party

Selling to a private party is one of the best ways to get the best price for your car. There are dozens of sites that offer free or cheap vehicle sales listings, and you can post several photos to attract as much attention as possible. The cool thing about selling online is that there are plenty of sites that are tailored to specific types of vehicles, so you can zero in on the audience that’s most likely to buy your particular car.

Since you’re selling directly to another person, you can ask for more money than you’d get at a dealership. That said, you’re on the hook for all of the paperwork, and you’re also going to have to meet and interact with a stranger for the transaction, which may be uncomfortable for some.

Read more on How to Sell a Car Yourself here.

Transferring Your Title

The process of transferring a car title looks a little different from state to state, but the basic steps are largely the same. The title is one of the most important documents related to your car, as it shows ownership. If you have a loan, the bank likely holds the title, so you’re going to have to pay the loan off before transferring the title can occur.

When you transfer a title, you’re required to sign it and many times, you’ll have to list details on the vehicle, such as mileage and your contact information. Some states require a notary for this step, so be sure to check before proceeding. Once the title has been signed and filled out, the buyer can take it to the DMV or their town office to order a new title in their name.