how to sell a car with a loan

Selling a car is a big decision, and it can feel a little more complicated when you still have a loan on it. You might be wondering if it’s even possible or what the right steps are to take. The good news is that it’s a common situation, and with the right approach, you can navigate the process smoothly. Knowing how to sell a car with a loan is all about understanding your loan balance and having a clear plan for handling the transaction.

First, Know Your Payoff Amount

Before you list your car for sale, your first step is to contact your lender. Ask for your 10-day payoff amount. This is the exact total, including interest, you’ll need to pay to officially own the car free and clear. This number is your most important piece of information, as it tells you exactly how much you need from the sale to settle your debt.

The Practical Steps for How to Sell a Car with a Loan

The most common and secure method involves a bit of coordination. Once you find a buyer and agree on a price, you’ll handle the financial transaction at your lender’s physical branch. The buyer provides payment (often a cashier’s check), you use those funds to pay off your loan balance right then and there, and the lender releases the title. This ensures the loan is settled immediately and the title is transferred correctly to the new owner.

What If You Owe More Than the Car’s Worth?

If your loan balance is higher than what a buyer is willing to pay, you have what’s called negative equity. In this situation, you will need to pay the difference out of your own pocket at the time of the sale. For example, if you owe $15,000 but only sell the car for $13,000, you must bring $2,000 to the closing to cover the gap and pay off the loan in full.

Preparing for a Smooth Sale

Transparency is key. Be upfront with potential buyers about the existing loan and your plan to pay it off at the lender’s office. Gather all your service records and have the car cleaned inside and out. Being organized and honest builds trust and makes the entire process feel more secure for everyone involved.

Selling a car with a loan is entirely manageable when you’re prepared. By starting with your payoff amount and planning the transaction carefully, you can successfully transfer your car to its new owner and settle your financial obligation at the same time.