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Can I sell my car under a loan?
I’m ready to get a new car, but I still owe money on the car I currently have. I want to sell the car for a down payment on the new one, but I’m not sure if that’s possible. Am I allowed to sell my car when it’s still under a loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Shopping for a new car is always exciting! As far as your current
car loan
, you can definitely sell your car even if you still owe on the loan. However, making sure you do so correctly can save you a headache and hundreds (or even thousands) of dollars along the way.If you want to sell a car you have a loan on, follow this checklist:
- If you have positive equity, or the car is worth more than you owe, the process is easy. Just look up the value of the car and either sell it privately and pay off the loan or trade it in and pay off the loan.
- If you have negative equity, it’s a bit more complicated. You should try to pay down the loan until you’re at a break-even point (if possible).
- Should you find that you can’t reach the break-even point, you have other options. You can pay the remaining loan balance after the sale of the car out of pocket, reach out to your lender to work something out, or roll the negative equity into the new car loan.
Note that if you roll the negative equity into the new car loan, you’re going to be upside down on the new car loan for a longer period of time.
Since you’re selling your car, make sure to switch your car insurance over to the new car. Your provider will usually give you a grace period to make the switch, but the sooner you do it, the better. If you want to shop around for new insurance to save even more money, download the Jerry app.
As a licensed broker,
Jerry
helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!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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