Selling a Car That Still Has Loan Payments

If you have lost your job or realized that your car is worth less than the amount of the loan, then you might decide to sell it before completely paying it off. Nowadays, there are many car financing options available through banks, credit unions and dealers. This is different from a title loan, where you own the car. If you want to know how to sell a car that has an owed balance and one that you still owe money on, then learn these are the key issues: 1) Present car value, 2) Total owed on loan, 3) Title transfer and 4) Lien release.

Getting Your Car Value

Calculating the present value of the car is very easy. You can find used car books in any library or do a Google search on the Internet. KBB.com (Kelley Blue Book) appraises your car value and gives you a price according to its conditions and specs. Simply type in the make, model and year of your vehicle and ask how much it is worth. You will be asked the mileage and condition of the car to complete the estimate.

Figure out how much you still owe on the car loan. Subtract the present value of the car from the total amount owed to determine how much more cash you need to pay off the loan.

Contact the financial lending company from which you received the car loan. While financial companies understand that circumstances change, they will still demand repayment of the outstanding loan balance.

These are the three main ways to deal with the loan:

  1. Repay entire loan with cash
  2. Get a third-party loan to cover the first loan
  3. Rearrange the loan with the original financing agency.

You will need the title, original loan contract and lien release to sell the car. When you take possession of a vehicle with an outstanding loan, the lender will usually place a “lien” on the vehicle, which allows the company to repossess the vehicle if you miss your payments. You will need a “lien release” to sell the car.

The financial lender will require money to transfer the physical title. A third-party financing company could refinance the remaining balance so you can close the original loan. If you conduct the sale at the lending institution, they can transfer the title.

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