You may need to know how to sell a car to pay off a loan if you are looking to trade up to a new vehicle, or if you are looking to eliminate some debts. As many consumers take long-term loans on their cars and trucks, being forced to sell a car to pay off a loan is very common. Finance companies and dealerships alike are accustomed to making the process quite easy. When selling a car to pay off your loan, it is most common to sell the vehicle to a dealership as a trade-in. However, it is also possible to sell a vehicle to a private party and pay the loan off. Whichever way you sell the car, the lien must be paid in full before the title is released to the new owner. Follow these steps to sell a car to pay off the car loan.
Find Your Payoff
The payoff amount is important when selling your car. You will want to sell or trade the car for an amount near the payoff, as this will require you to spend less of your own money to end the loan. Each of your monthly statements should include the payoff. However, if they do not, or you want an up-to-date total, you can call or email your finance company. The amount may also be listed in the online account center for your finance company. Remember that the payoff amount may not include monthly interest not yet billed, and late fees and penalties may also be left off the payoff amount.
Contact the Lending Company
If possible, the easiest way to sell your car with a loan still on it is to have the lending company cancel the loan. In order to do this, you'll need to be prepared to pay back the remaining sum of the loan itself. Depending upon how much money you have available and how much money the car is worth, this may mean a sizeable percentage of the cost of the car will need to go back to the lending company simply to cancel the loan.
Choose a Selling Price
Choosing a competitive selling price is important. Set the price too far below the payoff amount, and you will be responsible for paying a large chunk of the difference on your own. Set the price too high, and shoppers will simply bypass your listing. You can get an idea of a fair selling price by researching the private party sale values listed on Kelley Blue Book. If you are considering trading the vehicle toward a new one at a dealership, be sure to look up trade-in values, which are the wholesale values dealers hope to pay for cars.
Ready the Vehicle for Sale
Before offering the vehicle for sale, getting it detailed and having mechanical repairs made, if needed, can increase its resale value and help offset some of your negative equity. When offering the vehicle for sale, be sure to advertise using local newspapers in addition to websites like CarsDirect.
Complete the Transaction
Once you and a buyer agree on a fair price, complete the transaction. If you are selling the vehicle for less than the payoff amount, you must write a check to compensate for the difference between the selling price and payoff. Once you submit payment in full to satisfy the payoff amount, the finance company will send you the title, as the original owner. Once the title is received, it can be reassigned to the new owner. If you are trading to a dealership, the dealership will handle the payoff paperwork.
Have the Lending Company Transfer the Title
Many lending companies will wish to oversee the process of selling the vehicle to the new party in order to be sure you aren't attempting to do anything illegal or unscrupulous. If this is the case, you may need to arrange with your buyer to meet up at a predetermined location with a representative from the lending company to transfer the title. Check with the lending company to see if this is a requirement.