Selling a car can be a complicated task when you still have a loan attached to it. Many people think it’s impossible, but the truth is, you can sell your car even if there is an outstanding loan. However, there are a few things you should know before you jump into selling. Let’s break it down step by step so that it’s clear and easy to understand.
Understand Your Loan Balance
Before selling your car, the first thing you need to do is find out how much money you still owe on the loan. This is called your loan balance. You can get this information by contacting your lender or checking your latest statement. Your loan balance will help you figure out how much money you need to pay off before you can sell the car or transfer ownership to someone else.
Is Your Car’s Value More Than the Loan Balance?
Once you know your loan balance, compare it with the value of your car. You can use websites like Kelley Blue Book to estimate your car’s value. If your car is worth more than your loan balance, that’s good news! It means you can sell the car, pay off the loan, and keep the extra money. For example, if your car is worth $15,000 and you owe $10,000, you can sell the car, pay off the loan, and pocket $5,000.
What If You Owe More Than the Car Is Worth?
If your loan balance is more than your car’s value, don’t worry. You can still sell the car, but you’ll need to cover the difference. For example, if your car is worth $10,000 but you owe $12,000, you will need to pay the remaining $2,000 to your lender after selling the car. This is called being “upside-down” or “underwater” on your loan.
Steps to Sell a Car with a Loan
Now that you know your loan balance and car value, here’s what you can do to sell your car:
First, talk to your lender. Tell them you plan to sell your car, and they will explain what needs to be done. In many cases, the buyer will pay the lender directly to settle the loan. The lender may also transfer the title to the buyer once the loan is paid off.
Next, find a buyer. You can sell the car to a private buyer, a dealership, or through an online platform. Once you have a buyer, explain that the car still has a loan on it. Most buyers understand this, and it won’t stop them from buying the car.
When you receive the money from the sale, use it to pay off the loan. If there’s extra money after paying off the loan, it’s yours to keep. If the sale doesn’t cover the loan, you’ll need to pay the remaining balance.
Should You Sell Your Car to a Dealership?
Selling your car to a dealership can be a quick and easy way to get out of your loan. Dealerships are used to handling cars with loans, and they often take care of paying off your loan directly. However, keep in mind that dealerships may offer you less money for your car than a private buyer would. This could leave you with less money to pay off your loan, especially if you’re upside-down on it.
Selling a Car Online
Selling your car online can be another good option. Websites like Carvana and Vroom buy cars even if they still have a loan on them. They will typically pay off your loan directly and handle the paperwork for you. Make sure to read their terms and conditions before you proceed.
Can You Trade In Your Car with a Loan?
Another option you have is trading in your car. When you trade in your car at a dealership, the dealership will pay off your loan as part of the trade-in process. However, just like selling the car, if your car’s value is less than your loan balance, you’ll still need to cover the difference. Trading in your car can be a convenient option if you plan to buy a new car.
How to Handle the Paperwork
When selling a car with a loan, there’s a bit more paperwork involved than if you owned the car outright. Your lender will usually hold the title to the car, so you will need to work with them to transfer it to the new owner. Once the loan is paid off, the lender will release the title. The title transfer process can vary by state, so it’s a good idea to check your local regulations.
Is It Worth Selling a Car with a Loan?
Selling a car with a loan can be a little more complicated than selling a car you fully own, but it’s definitely possible. If you’re in a situation where you need to get out of the loan, it can be worth the extra effort. Just make sure to know your loan balance, understand your car’s value, and be prepared to pay off any remaining loan amount. Whether you sell to a private buyer, a dealership, or trade it in, there’s a way to make it work.
FAQs
Can I sell my car with a loan on it?
Yes, you can sell your car even if it has a loan, but you need to pay off the loan first.
What happens if I owe more than my car is worth?
You will need to pay the remaining balance after selling the car.
Can I trade in a car with a loan?
Yes, dealerships will handle the loan payoff during a trade-in.
Will a dealership buy my car if I still have a loan?
Yes, most dealerships will buy your car and pay off the loan.
How do I find out how much I owe on my car loan?
You can contact your lender or check your loan statement.