The main thing to note, when selling a car that still has a loan taken out on it, is that it may take a little longer – but can be done.
It gets a little more complicated due to the fact that you are not the outright owner, given that you still owe money on the vehicle. And so the process must also involve the lender.
All this means is that the lender will still receive any outstanding money owed on the car, making the sale fair on everyone involved.
Read on to learn how to sell a car you owe money on!
You must start by asking the lender what the ‘payoff amount’ is.
This figure is what it will cost you to buy the car from the lender fully, giving you sole ownership.
If this figure is paid to the lender, they can sign the title of the car over to you.
The process often depends on the lender themselves. For example, if it is an online lender, they might refer you to a banking partner to handle things. While a local bank may offer to deal with whatever private buyer you decide to sell to.
What is the Value of the Car?
Next, have the car valued.
This can be done using an online tool or a pricing guide. This will determine the current private party value of the car, indicating the money you will make from a private sale.
There is also a trade-in value of a car, which might make you less money.
Positive and Negative Equity
Whatever the value of your vehicle, you must then subtract the payoff figure from this which determines whether you have positive or negative equity in the car.
If the calculation is a minus figure, you will need to pay the lender all the money you sell the car for and make up the difference.
The cleanest way to do this is to pay the lender with your own money. But if you need to, you might want to take out a further loan, pay off the existing lender, and then owe on the new loan.
Either way, you need to settle things with the original lender.
Your private buyer’s money will go straight to your lender and you will make up the difference.
When this is settled, the lender can sign off the title and registration to the new buyer.
This process is much more seamless if the car has positive equity on it.
Your private buyer pays the lender with the money from the sale. The amount left over from the car’s value will be paid to you by the lender. You then have a little extra towards your new vehicle, should you be looking to buy one.
If you own your car outright, remember you can get cash for junk cars.
That’s How to Sell a Car you Owe Money on
Now you know how to sell a car you owe money on with the help of our comprehensive guide.
And there’s a lot more information where that came from.