how to sell a car you are still financing

Selling a car is a big decision, and it can feel even more complex when you don’t technically own it yet. If you’re still making payments, the bank or lender holds the title as collateral. This situation is more common than you might think, and navigating it successfully is entirely possible. Knowing the exact steps for how to sell a car you are still financing is the key to a smooth and successful transaction that gets you out from under your loan.

First, Determine Your Payoff Amount

Before you do anything else, contact your lender to request your 10-day payoff amount. This is the exact figure you’ll need to pay to completely satisfy the loan, including any interest that will accrue over the next ten days. This number is crucial because it tells you the minimum price you need to sell for to break even. If you sell for less, you’ll have to cover the difference out of your own pocket at the time of sale.

How to Sell a Car You Are Still Financing

The most common and secure method involves coordinating with your buyer and your lender. Once you have a serious buyer, you’ll typically meet at your bank or credit union. The buyer provides the payment, the lender processes it to pay off your loan, and then releases the title. In some cases, the buyer may pay you directly. If that happens, you must immediately use those funds to pay off the loan in full. Never transfer the car without settling the loan first, as you remain legally responsible for it.

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

If your loan balance is higher than the car’s current market value, you have what’s called negative equity. In this scenario, you will need to bring cash to the table to cover the shortfall when you pay off the loan. Before listing the car, research its value on sites like Kelley Blue Book to understand your potential gap. This allows you to plan financially and avoid any last-minute surprises.

Preparing for a Smooth Sale

Transparency is your best policy. Be upfront with potential buyers about the existing loan and your plan to pay it off at sale. Gather all your maintenance records and have your payoff amount handy. Being organized and honest builds trust and makes the process feel safer for everyone involved.

Selling a financed car requires a few extra steps, but it’s a very manageable process. By getting your numbers straight, communicating clearly, and coordinating the payment correctly, you can successfully sell your car and move on to your next vehicle with confidence.