PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
Loans
Car Loan
Compare Car Loans with Jerry
Jerry's Expert Advice
Car Loan Guides
Repairs
Car Repair Estimates
Repair Estimates for Popular Services
Advice
Read Car Content
Browse Jerry Car Advice
Check Out Expert Car QnA
Learn About How We Create Content
Jerry Data & Research
How do you pay off a car loan when selling a car?
Once you sell your car, despite having a loan balance, what happens to the loan? Is it expunged, or do you still have to pay it off? What happens to your credit score?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Those are great questions. In short, the sale cannot be finalized until the
car loan
has been paid off or transferred to the buyer. When you take out a car loan, the lender places a
lien
on the title, which means you cannot transfer the title
to a new owner without removing the lien or getting approval from the lender. In fact, the DMV won’t even process a title transfer if there is a lien on the title. If you want to sell your car while it is still being paid off, you need to contact the lender and ask what their policy is. Often, lenders allow the buyer to pay the remainder of the loan in exchange for a free and clear title, but policies vary, so it’s important to confirm with your lender.
Once the loan has been paid off, you may see a slight decrease in your credit score, but it is usually temporary as a result of closing an active credit account. If you have more specific questions, your lender should be able to help.
Finally, after the title has been transferred and the car has been sold, don’t forget to inform your
car insurance
company! If you still need an active insurance policy, you can ensure you’re getting the best rate by using
Jerry
, the number-one-rated car insurance app. Jerry shops for low prices with over 50 top insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away! They even help cancel your old policy. View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
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.
Join 4M+ members in lowering their car insurance
You Might Also Be Interested
Read Advice From Car Experts At Jerry
What Others Are Asking
Browse More Content
Insurance for Your Car
Insurance in Your State
Easiest way to compare and buy car insurance
No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
