how to sell a car you still owe money on

That moment arrives when you’re ready for a new vehicle, but there’s one small complication: you haven’t quite finished paying off your current one. Seeing that remaining loan balance can feel like a giant roadblock standing between you and your next car. The good news is, this is a very common situation, and with the right steps, you can navigate it smoothly.

Figuring out how to sell a car you still owe money on might seem daunting, but it’s entirely possible. The key is understanding that you don’t technically own the car outright—the lender does. This means you need a solid plan to handle the loan payoff as part of the sale. Let’s walk through the process so you can move forward with confidence.

Your First Step: Determine Your Payoff Amount

Before you list your car for sale, you need to know exactly where you stand financially. Contact your lender and ask for your 10-day payoff amount. This is the total sum required 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 price you need to get from the sale to break even.

The Practical Guide on How to Sell a Car You Still Owe Money On

There are two main paths you can take, and the best one depends on your car’s value versus your loan balance. First, find out your car’s current market value using online valuation tools.

If your car is worth more than your loan balance (you have positive equity), you’re in a great position. You can sell the car privately or to a dealership. The most secure method for a private sale is to coordinate the transaction at your lender’s local branch. The buyer pays the lender directly, the lender hands over the title, and you receive any leftover money.

If you owe more than the car is worth (this is called being “upside-down”), you’ll need to cover the difference. You can pay the gap out-of-pocket at the time of sale. Another option is to see if a dealership will roll the remaining balance into a new car loan, but be cautious as this increases your debt on the new vehicle.

Arranging a Secure Transaction

Safety and transparency are paramount. Always be upfront with potential buyers about the existing loan. For in-person meetings, choose a secure, public location. When it’s time to pay, use a secure method like a cashier’s check or an escrow service. The goal is to ensure the funds go directly to paying off the loan so the title can be released smoothly to the new owner.

Selling a car with a loan still on it requires a bit more coordination, but it’s a perfectly manageable process. By starting with your payoff amount and choosing a secure payment method, you can successfully sell your car and settle your debt, paving the way for your next vehicle.