Can I Sell My Car If I Haven’t Paid It Off Yet?
What are the rules for getting rid of a car I’m still making loan payments on?
Even though you only bought your car a couple of years ago, you’re already itching to replace it. Unfortunately, you’re still making monthly payments to the bank on the balance of the loan. Are you prohibited from selling your car if you have a lien on it, or is there a way to get rid of it without paying the remaining balance you owe?
Need More Information on How Car Loans Work? Here’s a helpful resource
How to sell a car you still owe money on
The term on most vehicle financing plans is 5-6 years, but that doesn’t mean you have to wait that long until you can sell your car and replace it with a new one.
According to the finance experts at Money Under 30, it is possible to sell your car even if you have payments left on it. You’re not obligated to pay off the remainder of your loan before passing ownership to another person. But, one way or another, the bank does have to be paid. You can’t pocket the money the seller pays you and walk away.
Your best route for approaching this situation is to contact the lender who has a lien on your car. Do this first so they know you’re planning to sell the car and can give you guidance on how they’d prefer you proceed with the transaction. Since they possess your car’s title, you’ll have to abide by their rules.
Make sure that the payoff amount (including projected interest) isn’t higher than the current value of the vehicle. If you owe more on the car than it’s worth, it’s going to be difficult to find a buyer who’s willing to pay off the remaining loan knowing that. If this is the case, you’ll probably have to pay the difference yourself.
Once you know how to resolve the lien on the car, you can decide who to sell the vehicle to. Selling to a car dealership is simple because the finance officers will help resolve the existing loan for you and make sure all the paperwork is taken care of.
If you’re selling to a private buyer, hold the sale in person at the bank so everything can be taken care of at one time with all involved parties. In both cases, make sure you bring all documents you possess pertaining to the original purchase and registration of the car.
Once you sell the car, the money you’re paid will go to the lender first to pay off the loan, and then you can keep the rest. Thankfully, you have the freedom to sell your car even if you still owe money on it — as long as you follow the proper procedure.
Be Prepared! Make sure you have these documents when you sell your car
Aaron is unashamed to be a native Clevelander and the proud driver of a Hyundai Veloster Turbo (which recently replaced his 1995 Saturn SC-2). He gleefully utilizes his background in theater, literature, and communication to dramatically recite his own articles to nearby youth. Mr. Widmar happily resides in Dayton, Ohio with his magnificent wife, Vicki, but is often on the road with her exploring new destinations. Aaron has high aspirations for his writing career but often gets distracted pondering the profound nature of the human condition and forgets what he was writing… See more articles by Aaron.