how to sale a car that is financed

Selling a car is a big decision, and it can feel a bit more complicated when you still have a loan on it. You might be wondering if it’s even possible or what steps you need to take to make it a smooth process. The good news is that it’s a common situation, and with the right approach, you can successfully navigate the sale.

When you’re figuring out how to sale a car that is financed, the most important thing to know is that the lender holds the title until you pay off the loan. This means you’ll need to coordinate paying off that loan as part of the sale. It requires a few extra steps, but it’s entirely manageable.

Your First Step: Know Your Payoff Amount

Before you list your car for sale, contact your lender and ask for your 10-day payoff amount. This is the exact figure needed to pay off your loan completely, including any interest that will accrue over the next ten days. This number is crucial because it tells you the minimum you need to get from the sale to break even.

How to Sale a Car That Is Financed Successfully

Transparency is your best friend here. Be upfront with potential buyers that the car has a loan; it’s a normal situation. Once you have a serious buyer, you have two main paths. The safest method is to use an escrow service or meet the buyer at your bank or their credit union. The buyer provides the funds directly to the lender, the lender releases the title, and you handle any difference if the sale price is higher than the payoff.

Handling the Transaction Securely

Avoid the risky scenario of accepting a personal check and trusting the buyer to wait for the title. A direct, verified payment method protects everyone. If the sale price is more than your loan balance, you get to keep the difference. If it’s less, which is called being upside-down, you will need to cover the gap with your own funds at the time of sale.

Finalizing the Paperwork

After the loan is settled, you’re not quite done. You must complete the official sale paperwork for your state, which typically includes a bill of sale and a release of liability. Submitting the release of liability protects you from any tickets or fees the new owner might incur after the sale.

Selling a financed car is a straightforward process when you plan ahead. By knowing your numbers, communicating clearly, and using secure payment methods, you can confidently transition your car to its new owner and settle your financial obligation.