How to Sell a Car with an Existing Loan

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Selling a car that still has a car loan is easier than you might expect. You just need to make sure you communicate with your lender so the buyer can pay the right party, and you’ll either get the excess money or pay off what’s still owed on the loan.
Most people sell a car at some point in their life. But it’s not always old cars that we’ve had for a decade or two that we decide to sell. Sometimes people sell cars that they’ve only had for a few years.
If you’re doing that, then you still may have a loan out on the car, and owe money to a lender. So, how do you go about selling a car with a loan? Jerry has compiled everything you need to know about selling your car without a loan.
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How to sell a car with a loan

Contact your lender

The first thing you want to do when selling a car with a loan is contact your lender. Whether your car is financed through a corporate bank or financier, a private company, or a small credit union, you need to let them know that you’re planning on selling the car, so they can alert you to any information that you may need to know.
It’s vital to include your lender in this process, because ultimately, they own the car until it’s fully paid off. As long as you still owe your lender money, it’s technically their vehicle, and they should be included in this process. Some lenders have different requirements, so they’ll let you know everything you need to know as you begin the process.
You’ll also need to ask the lender how much you still owe on the car. Ask them for the balance on the car, so you can see how much more money they need to receive in this process.

Figure out how much your car is worth

Now it’s time to figure out how much your car is actually worth. The best way to do that is by using an appraisal website, such as Kelley Blue Book. With a website such as Kelley Blue Book, you can get a great estimate for how much money you can sell your car for.
Just put all of your car details into the car value estimation tool, and you’ll have the actual cash value (ACV) of your car in no time.

Find a buyer

Now that you know what your car is worth, it’s time to find a buyer. List your car online and negotiate with potential buyers until you’ve received a deal that you’re comfortable with.

Determine the difference between what you owe and what the car is worth

Now you have the two prices involved: the amount that you still owe on the car, and the price that you’re going to get from the buyer. Sometimes the former will be larger than the latter, and sometimes the latter will be greater than the former.
If you’re selling the car for more than you owe, then that means you have positive equity, and stand to make money from this process. If you’re selling the car for less than you owe, then you have negative equity, and will owe money to the lender. Figure out the difference, so you know how much money you’ll be making or losing.

Have the buyer pay the lender, with the difference going into or out of your pocket

Now it’s time to take whatever advice your lender gave you for completing the process and involve the buyer along the way.
Here’s how it works: The buyer will pay the amount you agreed on to the lender. If you have positive equity, the lender will then pay the excess money to you. If you have negative equity, then you’ll owe the difference to the lender, which you can pay at once or over time by setting up another loan.
If you have positive equity, you can also have the buyer pay off the exact loan amount, and then pay you separately. However, since the buyer will likely be using a lender of their own, it’s easiest to have it go through your lender.
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