How To Sell A Financed Car Your Options
First, lets review all the options you have so that you know youre making the best financial decision with your vehicle as well as some tips on selling a financed car.
Sell Your Financed Car to a Dealer or Trade / Cash for Your Car?
You can try to either sell your car to a dealer or trade it in for a new car. Yes, some used car dealers will flat out give you cash for your car. You can also trade your car in for another car and then what you owe on your current car gets rolled into the new car along with what youre going to pay for that car. The nice thing is that the dealer does all the necessary paperwork for you. Theyll want to know the name of the lender and your account number or loan number as they will want confirmation.
These kinds of loans are risky and not all banks will offer these loans because theyre setting up a loan for more than the value of the new car although, with banks, the best kinds of loans to give out are car loans , so its entirely possible to do it. I have. It just took a long time to pay it and I would not suggest doing that.
You will get more money for your car or truck if you sell it yourself rather than trade it in to a car dealer. The dealer has staff to pay and they may be required by the state to fix some things before they can resell it. They also need to be able to make some money on it.
Try to Clear Your Car Loan if You Can
Have Someone Take Over Making Your Payments
Talk to Your Bank / Lender
Compare Car Loans For Refinancing
3. Use savings, another loan or a credit card
Pay off your financed car before selling it with your own savings to eliminate debt altogether. Finding a low interest credit card, a small loan or debt consolidation can be a good option too if the rates are lower and you know you can keep up with payments.
- Savings. If you can afford it, paying off the loan before selling your financed car with your own savings eliminates debt altogether.
- Low-interest credit card. Good planning can help you keep costs down if you choose a . However, if you cant meet the minimum repayments, it could end up costing you more.
- Small loan. If you plan on selling the car as soon as its no longer being financed or you only have a small amount left to pay off, then a small personal loan might be more suitable than a refinancing loan.
- Debt consolidation loan. If you have multiple high-interest loans and credit cards on top of your auto loan, you can consolidate all of your debt to get rid of your car loan before selling the car.
Donate Your Old Car To Charity
If your old car isnt worth much or you havent got the time to arrange selling it, why not donate it to Charitycar
Theyll collect it free of charge and youll have the satisfaction of knowing your cars value is going to the charity of your choice.
You could also consider donating your car through Giveacar
If you donate your old car, it will either be sold at auction or scrapped.
Also Check: Typical Origination Fee
Block Out Your Personal Information
Before you hand over all the service records to the buyer, be sure to block out any personal information with a black permanent marker, such as credit card numbers, phone numbers or any other information you do not want made public. If you originally bought the car from a dealer, remove any contracts or completed credit applications from your glove compartment or owners manual. In the wrong hands, this is a perfect tool for identity theft, as it may contain your social security number and previous address information.
Selling A Car At Auction
Auctioning a car is quick and relatively hassle-free.
But theres no guarantee your car will reach its reserve price, and you might end up getting less for it than through other ways of selling. And, if it doesnt reach your reserved price, youll have to take it home and try again in another sale.
Most auction buyers are in the motor trade. If youre lucky and attract a private buyer, they might be prepared to pay more for your car than a dealer would be.
You can also look at online auction sites like eBay, but youll have to do a lot more of the work around creating the advert and answering questions. If your car sells, the winning bidder pays for it immediately and the auction company then gives you the sale price minus its commission. This can be up to 10% of the sale price.
Don’t Miss: Avant Refinance Application
How To Sell A Car With A Loan: What To Do First
The first step to figuring out how to sell a car with a loan is to gather payoff information about your current auto loan. Youll need to find out the outstanding loan amount because the balance will need to be paid off in full before you can transfer your cars title to a new owner.
See, the title determines who has a legal ownership interest in the car. When you have a car loan, the lender has a lien on the vehicle because they have a claim to it. The lender typically holds onto the title while you still have a loan. A new buyer cant take ownership until the lender has been paid in full, the lien has been released, and the lender gives the owner the title so the owner can do a title transfer to the buyer.
You should be able to check the outstanding balance of your auto loan by signing into your loan account online or calling your lender. Your auto loan should also show up on your credit report, so you can find information about who your lender is and what your recent outstanding balance was if you arent sure what lender to contact.
Determine The Vehicle’s Worth
Sometimes the decision to sell a vehicle privately comes down to the amount of profit you’ll gain through the transaction.
Before you can decide whether or not the process will be worth the effort, you’ll need to find out exactly how much your car is worth.
A few resources that will estimate your vehicle’s current market value include:
If your car isn’t worth as much as you thought, you may want to consider it for trade-in value at a dealership instead.
Also Check: Usaa Auto Loan Approval Odds
Compare Car Loans With Canstar
The table below displays some of the secured car loan products available on Canstars database for a three-year car loan of $10,000 in Auckland . The products are sorted by Star Rating followed by company name . Use Canstars personal loan comparison selector to view a wider range of products on Canstars database. Canstar may earn a fee for referrals.
Lien Paid By The Buyer
If settling the transaction at the lenders office is not feasible, the buyer can pay the lender directly through a wire transfer or with a cashiers check. Either of these methods can satisfy a lien and can also be used to pay the remaining balance to the seller.
This option provides an added level of assurance to the buyer. That’s because the funds can be routed directly to the lender, which completely avoids the need to send the sale proceeds to the seller, who must then transfer the funds to the lender to satisfy the loan.
Depending on the laws of the state where the sale takes place, the buyer may be able to send the paperwork and transfer instructions along with the payment to receive the cleared certificate of title directly from the lender. If they can’t do this, the lender can send the cleared title to the seller instead. In either situation, both parties must sign the certificate of title to complete the sale and transfer ownership to the buyer.
One of the problems with this option lies with the fact that if there are any proceeds left after the loan is paid off, it could take a while for the lender or lien holder to issue a check. For instance, let’s say you have a balance of $9,000 on the car. But the buyer agrees to pay you $9,500 for some of the upgrades you’ve made, such as a new stereo system. It may take some time for you to get your money. That’s because you’ll be at the mercy of the lien holder issuing you a check for the proceeds.
Read Also: Usaa Car Loan Credit Score
After You Have Sold Your Car
After youve sold your car you need to inform the DVLA youre no longer the owner.
You and the person youre selling to, must sign and date the relevant part of the V5C and send it to the DVLA.
Dont forget to pay off any finance that is still left outstanding on your car, and to let your insurer know that youve sold the car.
For more tips on preparing your car for sale read Which?
Ready To Get Your Next Car Loan
Now that you know why a private party auto loan from a direct lender might not be in the cards for you as a bad credit borrower, it’s time to find out what is, and Auto Credit Express wants to help.
We work with a nationwide network of special finance dealers that have subprime lending resources. Fill out our fast and free car loan request form, and we’ll work to connect you with a local dealership right away. Don’t hesitate any longer!
Don’t Miss: What Credit Score Is Needed For Usaa Auto Loan
Guide To Selling Your Car
Selling an old car or truck privately doesn’t have to be complicated. With a little research and organization, you can simplify the process and get the most profit possible.
Use this simple step-by-step guide to help you along the way. Additionally, you can check out the other guides in this section, including:
Youre Our First Priorityevery Time
We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
Recommended Reading: Usaa Auto Loans Bad Credit
About The Author Of This Page
This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.
Enjoy reading this article?
You can like us on and get social, or sign up to receive more news like this straight to your inbox.
Selling A Car With Finance Owing Can I Do It
Yes. You can sell a car with finance owing. This could entail selling to a dealer, as a trade-in for another vehicle, or, it could be a private sale. Either way, it is possible. However, there may be some extra steps involved when selling a car with finance owing. It really depends on the type of car loan you have.
You May Like: Drb Loan Consolidation Reviews
Private Party Auto Loan Vs Other Auto Loans
A private party auto loan may have a higher interest rate than other auto loans. Heres a comparison showing how your total loan cost might compare on two options: a private party auto loan on a less expensive car and a used-car auto loan on the same make and model at the dealers higher price. For this example, we will evaluate a 2016 Honda Civic LX Sedan with 50,000 miles.
|Dealership||Private seller (online lender, private party auto loan||Savings with private party auto loan|
Selling Your Car Privately With Finance Owing
Selling your car privately may be a good option if you are looking to downgrade your car, or, you are simply looking to pay off the loan with no need for a new vehicle. As while a private sale may cover the full remaining loan, the money left over may not be enough to cover the cost of a new vehicle. Or, may only be enough for a much cheaper vehicle.
If you are selling privately, you need to communicate with the buyer that there is money still owing. After all, a quick history check on the car will tell the potential buyer this information anyway. So youre better off being upfront first.
With money owing, the lender retains the right to take the car back if you stop paying your loan. Thats a considerable risk for a potential buyer. Even if they buy the car, if you dont then pay the loan off, the new buyer could see the car taken off them.
So, you need to pay off the loan before the sale is completed. This could be done either through the new owner paying off the loan for you and then purchasing the car . Or, the new owner purchasing the car on the condition you then use that money to pay off the loan. Either way, this can only be done with your lenders approval, and the sale should take place at the location of your lender. This will avoid any risks.
Also Check: What Credit Score Is Needed For Usaa Auto Loan
Get The Lender’s Authorization
Another reason that you may not have the title is that a lender who helps you finance a vehicle will generally hold onto the actual title until the car or truck is completely paid off. This happens a lot with local dealershipsyou buy a car or truck, agree to make payments and drive off the lot. However, the dealer is still holding the title for the vehicle. In legal terms, this is called a “lien.” If you are in this situation, you need to either pay the car off before selling, or make arrangements for the car’s next owner to take over your debt.
Personal Check After Selling A Car
Accepting a personal check is not advised. If the buyer insists, stipulate you will not hand over the title until the check clears. Or, better yet, agree to meet the buyer at his or her bank with the personal check and have the buyer cash it. You can then accept the cash or have a cashiers check made out to you.
If the potential buyer balks at this, void the agreement and begin looking for a new buyer.
You May Like: Usaa Auto Loan Credit Score Requirements
If You Can Hold The Sale At The Bank That Holds Your Loan
The easiest way to handle the sale of a car that has a loan on it is to hold the sale at the physical address of the lender. That will provide you with the ability to collect the funds from the buyer, pay off the loan to the bank, and transfer the title to the new owner.
Holding the sale at the lending institution has certain other advantages. For one, it represents a neutral site to hold the sale. For another, it gives the sale a more formal tone than if you were to complete it in your driveway. Third, any documents that you may need from the lender will be immediately available. And, finally, you may be able to have the lenders staff make copies or notarize any documents necessary.
This is the best way to go if your loan is from a local bank or credit union. Unfortunately, many loans written at car dealerships come from big national banks like Chase, Capital One, or the financing arms of car manufacturers . This makes selling your car with an outstanding loan balance a bit more difficultbut not impossible.
Find How Much You Owe On Your Loan
The next thing to do is find out how much you owe on your car loan. The information you want is the “payoff balance,” which might be slightly different from the balance listed on your most recent statement. Typically, it is easy to get the payoff balance amount online or with a phone call to your lender.
Subtracting the payoff balance from your car’s value determines the amount of money you can expect to receive by selling your vehicle. However, keep in mind that the number you get from performing that simple equation might be negative. That means what you sell the car for won’t pay off the car loan balance.
Let’s say, for example, your payoff balance is $10,000, and your car is only worth $9,000. This $1,000 of “negative equity” also known as being “upside-down” or “underwater” on the loan means that simply to sell your car to someone else, you have to come up with an extra $1,000 to pay off the car loan.
Being upside down doesn’t make it impossible for you to sell your car, but it is another pothole on what can be a complicated road to success.
Don’t Miss: How Long Does Sba Loan Approval Take