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How to Sell a Car With a Loan


Learn about selling a vehicle with a loan to a private party or 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’s paid off.

That begs the question: How can you sell a car if you don’t hold the title?

We’ll tell you about what you need to do to sell the car when you still owe money on it and provide tips for completing the sale.

Research Your Car’s Value

If you’re selling your car with a loan, you’ll want to check the value of your vehicle. Use the valuation tool from our sister site Kelley Blue Book to obtain the estimated range for trading it in at a dealership or selling to a private party. You can also ask for an Instant Cash Offer from a dealership. It’s a no-obligation offer. With the offer or several in hand, it’s easier to know where you stand.

Determine the Loan Payoff

You’ll 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 car value section below.

At this point in the call with the lender, you’ll need information for the selling scenarios below because each will be different.

Trading in the Car to a Dealership

  • Ask the lender what it would take to trade in the car to a dealership. You can also check with the dealership to see what they need if you’re that far along.
  • Find out what paperwork for the car you will need and how and where it needs to be signed. You can also ask the car dealership.

Selling the Car to a Private Owner

  • Request all the details for completing a sale to a private party.
  • Find out what kind of paperwork the lender will need to get the deal done. The paperwork could be as simple as bringing the buyer to the bank. Also, the lender will send the title to the buyer.

Tips to Sell a Car with a Loan

Check out these tips for those looking to sell a vehicle. These will help you ease your mind during the sales process.

1. Use the Buyer’s Money

Here’s the tricky part: Once you’ve determined the payoff amount and you’ve sold the car, you’ll have to use the buyer’s money to pay off the note. Of course, you can use your own money, as well. However, for many sellers, paying off the car won’t be possible without the buyer’s money.

The result is that some buyers won’t be comfortable with this type of transaction. To ease a potential buyer’s worry, ask the buyer to meet you at the bank where your car is financed and ask an employee to explain the situation. If the buyer remains uneasy, you may have to use your own cash to pay off the loan — or worse yet, look for a different buyer.

The good news is that many banks will accept payment directly from the buyer. We suggest asking the buyer to write two checks: one to your bank for the payoff amount and one to you for the remainder of your deal amount.

2. Transfer the Car Title

Once the buyer pays for the car, and you pay off the loan, the car title becomes free and clear.

Most banks give you two options: You can take the title or let the bank know where to send the title. If the buyer takes a loan out on the car, your financial institution will need to send the title to the buyer’s bank. Otherwise, the title can go directly to the buyer.

3. Ease Any Buyer Concerns

Those looking to sell a car while the bank holds the title will have to do a little more legwork, but it’s not impossible. Just be sure to go out of your way to ease the buyer’s concerns.

After all, the buyer is spending a large amount of money — and he or she is acting on your word that you’ll send along the title.

Related Car Buying Articles

Editor’s Note: This article has been updated for accuracy since it was originally published.

FAQ

Can you sell a car with a loan?

Yes. If you still owe money on your car, you can still sell it, but you will have to go through your bank to find out how to pay off the remaining balance in order to transfer the title.

How to transfer a car's title?

After you have completely paid off your vehicle, you can now transfer the title to the new owner. You can either tell the bank whom to send the title to or simply give the title to the new owner yourself. If the new owner is planning on taking out a loan to pay off the vehicle, then the title will be sent to their respective bank.

Where to sell a car online?

The best place to sell your car online is on Autotrader or Kelley Blue Book.

Doug Demuro
Doug DeMuro writes articles and makes videos, mainly about cars. Doug was born in Denver, Colorado, and received an economics degree from Emory University in Atlanta. After graduation, Doug spent three years working for Porsche Cars North America. Eventually, he quit his job to become a writer, largely because it meant that he no longer had to wear pants. Doug’s work has been featured in a... Read More about Doug Demuro

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41 COMMENTS

  1. Anyone here know how to reach WFS Financial, I need to get my lien release, they are impossible to reach.  Paid this car off in 2015, trying to sell my Toyota Carolla CE

    • They appear to not be responding even to Better Business Bureau complaints, so I would take this to the Attorney General’s office in your state.  Hopefully they will help you.

  2. Hello, I have a Dodge dart 2016 color white.i got that car last Jan 2018 dealership refinance my monthly payment is $298 for 62 months.i got behind for two months last year Jun and July 2018. They repo my car.i struggle to get my car bank giving me a hard time to get my car back.worried also for paying the storage fee in the toward.in short 3weeks  before I got my car back.. almost $2000 I pay for everything. I pay the bank $1200+ the repo storage $600.. the rest for riding a bus or ubber.then in tow yard inside my car my staff is everywhere.i didn’t say nothing all I want is to go out the yard and drive my car..when I get home I open my hood they change my car battery.. some fuses missing. .and my staff.. after I got my car for repo.i haven’t pay the bank again.until today.i got my car like August.registration is January. I can’t register I owe the bank.what should I do with my car..pleased advised me..thank u 

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