Selling My Car With A Loan

If you're still paying for your vehicle, you can sell it or trade it to a dealer toward another purchase. It's a common misconception that it's necessary to pay off an auto loan off before selling a vehicle. If you owe more than your vehicle's value, selling might not prove worthwhile, although the option might be beneficial for borrowers who pay a high interest rate.

Check your vehicle's private sale value at Galves or Edmunds.com. Be sure to use a median number from any guides you use; all guides offer different values. Call your bank to get your car's payoff quote. If you can sell your vehicle for more than your payoff amount, you can keep the profit. If you owe more than your car's selling price, you'll have to provide the remaining balance due after your selling price to satisfy the loan.

You'll need a lien release from your lender to transfer ownership. Tell your buyer that you still owe money on your car loan, which isn't at all uncommon. Allow your buyer to make his payment directly to your lender if he prefers. If your lender isn't local, expect the payoff process to take up to one week or more. Discuss the payoff and lien release process with your lender before selling your vehicle so you can better communicate with your buyer.

If trading your car toward another purchase at a dealership, check its trade-in value. If you owe less than your car's value, the credit goes toward your new purchase as a down payment. If you owe more than your vehicle's value, you'll transfer the excess balance to your new car loan, although this might leave you in a negative equity situation, meaning you owe more than your car's value. Owing more than your car's value can make it difficult to sell or trade your vehicle in the future unless you provide a down payment.

If you still want to get out of your car loan and owe more than the car's value, check interest rates. If you can significantly reduce your loan interest rate, you'll save money even when transferring your old loan's balance to your new loan. To determine if the option can save you money, secure a loan preapproval and interest rate to calculate the amount of money you'll pay back with interest for either loan.

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