How do I sell a car if I still have a loan?
I want to sell my car rather than trade it in to get more money, but I still have a loan on it. How do I sell it?
People sell vehicles that have a car loan on them all the time. So don’t worry about the sale—it just takes a few extra steps.
To sell a car if you still have a loan, the first thing you want to do is head to your lender to get a payoff letter. This lets you know how much money is left on your loan down to the penny.
After you have this information, use a website like Edmunds or Kelley Blue Book to find the retail value of your car. Depending on how much you owe on the loan and your negotiation savvy, you can set your price at, below, or above this market price and see what happens.
Once you’ve found a buyer and agreed upon a price, head to your lender with the buyer. Here, the buyer can present the check to you or the lender, which is then used to pay off the loan. The rest of the money is yours.
Following this transaction, both you and the lender can sign the title over to the buyer and give the buyer a lien release, which will allow them to title it in their name. Never take a check from a buyer without going with them to the lender and never hand over a title without cash in hand.
If you have negative equity on the car, or owe more than the car is worth, the process works the same. The only difference is that you’ll have a remaining balance on the loan. You will be required to pay this off to clear the loan.
You should also cancel your car insurance unless you’re planning on buying a new car. If you’re going to buy a new car, it’s the perfect time to start shopping for insurance. Check out the Jerry app to compare dozens of quotes from some of the top companies in the car insurance industry.
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