If you wish to sell a car that's not paid off, you have to keep in mind a few guidelines to ensure that there aren't any complications in the future. It's certainly possible to sell your car even if the loan isn't paid off, although it's a slightly difficult process. It's best to sell the car yourself, as selling a car you don't legally own through a car dealer can be very expensive.
Selling a Car that Is Not Paid Off :
- You should ensure that the buyer is aware that the car's title isn't clear and obtain all the necessary documents such as the Bill of Sale and Transfer of Ownership from the DMV. You need to find out if a safety check or a smog certificate is required, to sell such a car.
- It's best to contact the lending institution to figure out the options available for closing the loan.
- You must close the loan offered by your lending company by visiting them in person and asking them to give you a lien release document, stating that there are no outstanding payments on your car.
- Alternatively, take the new buyer to the lien holder's office and have the new buyer complete the outstanding loan payments, in order to obtain a lien release document. You will then be able to transfer the car title to the new buyer.
- The car keys should not be handed over to the buyer prior to transferring the car title. Remember, if the new buyer gets into an accident, you as the title holder could be liable for any injuries caused from such an accident.
- If the title of your car is at the DMV, you should ask the prospective buyer to accompany you to the DMV office to get the new title. You can remove your name from the title and incorporate the buyer's name and thus absolve yourself from any responsibility.
- If you owe more on the car loan than the selling price of the car, you will have to pay off the balance of the loan in order to transfer the car to the new owner. You can take a personal loan to do so, but must be prepared to pay very high rates of interest.
- Another option would be to trade in your car. This is an easier option as you can rely on the car dealer to handle all the paperwork. However, you will get a lower price for your car, as the dealer will charge you a certain amount of money for trading in your vehicle. The dealer will also charge you more than the new car's real worth and offer you a higher rate of interest.
Although there are a lot of problems in selling a car that hasn't been paid off, you can accomplish this task without harming your credit score or losing too much money, if you do your research well and follow these guidelines.