Selling a Car with a Loan

Unveiling the Mystery: Selling a Car with a Loan


Selling a car with an active loan might seem like a daunting task, but it’s entirely doable. It just involves a few more steps compared to selling a car that’s fully paid off. Let’s dive into the intricacies of how to sell your car with a loan.

Selling a Car with a Loan

Find Your Car’s Market Value        

Before embarking on your car-selling journey, it’s crucial to know what your vehicle is worth. Several online resources can help you determine your car’s market value. Websites like Kelley Blue Book,, Carfax, and offer tools to assess your car’s worth.

These tools take into account factors like your car’s mileage, condition, and even service history or upgrades. Honesty is the best policy here; providing accurate information ensures potential buyers get a clear picture of your car’s condition.

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Get the Loan Payoff Amount

The next step involves contacting your lender to get the loan payoff amount. Keep in mind that this figure might differ slightly from your remaining loan balance. Lenders typically provide a payoff amount that’s valid for a specific duration, usually three, five, or ten days, including accrued interest.

Be aware of prepayment penalties, which are uncommon but still allowed in many states. Your lender should inform you if your payoff amount includes such penalties.

Ask Your Lender for Instructions

Your lender is a valuable resource in this process. When you get the payoff amount, inquire about the specific steps for completing the car sale. The process can vary depending on whether your loan is with a local bank, credit union, or an online lender.

For a local bank or credit union, you might need to visit a local branch with the buyer to sign the paperwork.

If your loan is with an online lender, they often have a network of banks for completing the sale.

Selling to a dealership is also an option, where they can liaise directly with your lender.

Determine Your Equity

Once you have both your car’s value and the payoff amount, it’s time to determine your equity in the vehicle. Positive equity means your car’s value exceeds your loan balance, while negative equity means you owe more than the car’s worth.

Positive Equity: When your car’s value is higher than your outstanding loan, you’re in luck. You’ll pocket the difference after paying off your loan.

Negative Equity: If you owe more on your loan than your car’s worth, you might have to cover the difference. Negotiating a higher sale price with your buyer or getting a personal loan are potential solutions, but tread carefully.

Find a Buyer

With your equity situation clear, it’s time to find a buyer. Ideally, you’ll have positive equity, allowing you to pay off the loan balance and even make a profit. If not, you’ll need to devise a plan to settle the remaining debt.

Negotiating with a buyer should only happen after you’ve calculated your equity and obtained the payoff amount from your lender.

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Collaborate with your lender to finish the sale

After negotiating a price with the buyer, it’s time to finalize the sale with your lender’s involvement. Depending on your equity, the process differs:

Positive Equity: The buyer pays you the purchase price, and you pay off the loan. The lender then releases the title to the new owner.

Negative Equity: The buyer pays the purchase price to the lender, but you’ll need to cover the remaining difference before the lender releases the title.

Selling a Car

Trading Your Car in a Word of Caution

If you’re considering trading in Selling a car with a loan the process is similar. However, it’s crucial to be cautious, especially if you have negative equity. Trading in your car and financing the negative equity can lead to a cycle of debt.


While selling a car with a loan may seem perplexing, it’s entirely manageable. The key is to work closely with your lender, make informed decisions about your equity, and find the right buyer. By following these steps, you can successfully sell your car even with an outstanding loan.


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