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How to sell a car with a loan?
For the past five years, I have made payments towards my loan. Now, I want to sell my car to clear my loan and put money towards other debt. My sister is interested in buying my car. How do I sell a car if I still owe money on it?
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great question! Selling an automobile you still owe money on might seem tricky, but rest assured, this is possible and only requires a few extra steps.
To sell a car with a loan to a private buyer, you must:
- Get in touch with your lender. You will need to learn the payoff amount for your loan. You will also need to communicate with your lender how they prefer to work with buyers to take over your loan.
- Figure out the market value of your vehicle. Use resources likeKelley Blue Bookor Edmunds to get an idea of your car’s trade-in value.
- Determine your equity. To calculate this, subtract the payoff value from the estimated cost of your car. If this number is negative, this means you areupside-down on your loan. You will need to give the lender all of the money from the car’s sale, and you will pay the remaining balance out of pocket. If this number is positive, you will sell the car, pay off the loan balance, and pocket the remaining amount as a nice little profit!
Anytime you make a change, like selling your car or buying a new one, be sure to notify your car insurance company. If you still have a car you need to insure, or if you want to help your sister save money on her car insurance, check out the number-one-rated car insurance app,
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