how do you sell a car that you are financing

Thinking about selling your car is exciting, but it can feel a bit complicated when you still have a loan to pay off. You don’t technically own the vehicle outright until that last payment is made. The good news is that it’s a very common situation, and with the right steps, you can successfully sell your car and settle your finances.

So, exactly how do you sell a car that you are financing? The process revolves around one key principle: you need to pay off your lender before you can transfer the title to the new owner. This might sound daunting, but it’s a straightforward path once you know the route.

Your First Step: Determine 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 total, including any interest that will accrue over the next ten days, needed to officially close your loan. This number is crucial because it tells you the minimum you must get from the sale to break even. Compare this to your car’s current market value to understand your financial position.

How Do You Sell a Car That You Are Financing?

The most common and secure method is to handle the transaction at your lender’s physical branch. Once you have a serious buyer, you can arrange to meet there. The buyer provides payment, you give it to the lender to pay off the loan, and the lender releases the title. This allows for a smooth, transparent transfer where everyone’s interests are protected. It’s the safest way to ensure the loan is settled and the buyer gets a clear title.

Arranging the Sale and Transfer

Be completely transparent with potential buyers. Let them know there’s a loan on the vehicle and explain your plan to pay it off at the time of sale. Some buyers might be hesitant, but your honesty will build trust. If an in-person meeting at the bank isn’t possible, you could use the buyer’s funds to pay off the loan yourself, but this requires a high level of trust and coordination with your lender on the timing.

Considering a Trade-In

If navigating a private sale seems too complex, trading in your financed car at a dealership is a simpler alternative. The dealer will handle paying off your existing loan directly. Just be aware that the trade-in offer might be lower than what you could get from a private buyer, as the dealer needs to make a profit on the resale.

Selling a financed car is entirely achievable. By starting with your payoff amount and choosing a secure method for the transaction, you can confidently move on to your next vehicle.