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Can I sell a car with a loan on it?
Is it possible to sell a car with a loan on it? I’ve been struggling to keep up with my monthly loan and I don’t think I can continue financing this vehicle. I still need a car for my job, so I would like to downgrade to a cheaper car.
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It is understandable why you would want to buy a cheaper vehicle. Although you haven’t paid off your loan yet, one way you can sell your car with a loan on it is to trade it with the dealership. The dealership will pay off your remaining balance, apply the trade-in value of your car towards purchasing your new car and roll the existing loan balance over to a new car loan.
Here’s how it works:
- Ask for your payoff amount. Contact your current lender to find out what your payoff amount is. The lender will release ownership of the car when the loan is paid off.
- Figure out the trade-in value of your vehicle: Use pricing guides to help get an idea of what your car is worth. Consider usingKelley Bluebookor Edmunds.
- Determine your equity. To calculate this, subtract the outstanding loan amount from the current value of the vehicle. If the difference is positive, you can sell the car, pay off the loan balance, and use the remaining profit to pay off other debts. If the difference is negative, you owe more on the loan than the car is currently worth. In this case, you will need to pass along all proceeds from the sale of the vehicle to the lender and pay the remaining loan balance out of pocket.
You can also try selling your car to a private buyer. This is a little more challenging but possible. The buyer will either need to be able to pay off the loan in full or refinance the existing loan in their name. Follow the above steps to help you estimate your profit or costs.
Once you get a new (to you) vehicle, be sure to shop around for car insurance using the number-one-rated car insurance app,
Jerry
. Choose from competitive quotes from more than 50 top insurance companies and Jerry takes care of the rest—securing your new policy and helping you cancel your old one. The average Jerry user saves $879 a year on car insurance.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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