how to sell a financed car

Thinking about selling your car, but you still have a loan on it? You’re not alone. Many people find themselves in this situation, whether they’re looking to upgrade, downsize, or simply need a change. The good news is that it’s entirely possible to sell a vehicle you’re still paying off. The process just requires a few extra steps compared to selling a car you own outright. Navigating the path of how to sell a financed car is all about understanding your loan balance and working closely with your lender.

First, Know Your Numbers

Before you list your car for sale, your first step is to contact your lender. You need to find out your current loan payoff amount. This is the exact sum required to completely pay off your loan, and it might be slightly different from the balance shown on your last statement. This number is your most critical piece of information, as it determines whether you’re in a positive or negative equity situation.

How to Sell a Financed Car Successfully

The most common and straightforward method is a private-party sale. Once you have a serious buyer and agree on a price, you’ll coordinate the payment. If the sale price is higher than your payoff amount, you’ll use the buyer’s funds to pay off the loan, and you get to keep the difference. Your lender will then send you the vehicle’s title, which you transfer to the new owner. Be transparent with potential buyers about the existing loan; it builds trust and manages expectations about the timeline for receiving the title.

What If You Owe More Than It’s Worth?

Being “upside down” on your loan, where you owe more than the car’s market value, is a tricky spot. You have a couple of options. You can pay the difference out of your own pocket to cover the gap between the sale price and the payoff amount. Alternatively, you could wait to sell if possible, making more payments to reduce the loan balance closer to the car’s value.

Considering a Trade-In

Trading in your financed car at a dealership is often the easiest route. The dealer will handle all the communication with your lender. They will pay off your existing loan and simply roll any remaining negative equity (the amount you still owe) into your new car loan. While convenient, remember that trade-in offers are typically lower than what you might get from a private sale.

Selling a car with a loan still on it requires a bit more coordination, but it’s a perfectly manageable process. By starting with a clear understanding of your loan details and communicating openly with both your lender and potential buyers, you can successfully make the sale and move on to your next vehicle.