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How to Sell a Car if the Bank Has the Title

Many car owners sell their vehicles privately, whether to dealers or other drivers. Likewise, many car owners have their cars financed through banks or credit unions. That begs the question: If you don’t hold the title, how can you sell a car? We’ve provided a few tips for car owners looking to sell their vehicle if the bank holds the title. 

Determine the Payoff

The first step is to find out what you still owe on the car. You can do that by calling the bank that holds the loan and simply asking what your payoff amount would be. While you’re on the phone, be sure to ask if they have any important procedures for a vehicle owner who’s selling his financed car to a third party. 

Use the Buyer’s Money

Here’s the tricky part: Once you’ve determined the payoff and 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. For many sellers, however, 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, accompany him or her to the bank where your car is financed and have an employee explain the situation. If the buyer is still uneasy, you may have to use your own cash to pay off the loan — or you may need to find a different buyer. 

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

Transfer the Title

Once the buyer pays for the car and you pay off the loan, the title is free and clear. Most banks give you two options: You can take the title, or you can let the bank know where to send the title. If the buyer is financing the car, your bank will need to send the title to the buyer’s bank. Otherwise, the title can go directly to the buyer. 

Tricky, but Not Impossible

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 concern. 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.

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

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