How to Sell a Car While You're Still Making Payments On it

January 27, 2012

Being forced to sell a car while you're still making payments on it can be a difficult situation, and your reasons for needing to sell the car can vary based on your financial and personal situations. In any case, selling a car with a lien is possible, but be upfront with the buyer so they understand the process you must follow to get the title in their hands. The only downside to selling a car while you're making payments is you could be responsible for paying the difference between what you owe on the vehicle and what you sell it for. However, if you have equity in your vehicle, you could actually come out ahead, selling the car for more than the payoff amount.

Step 1: Set a Price

Setting a competitive price is important when trying to sell your car. If you owe much more than the car is worth, you may feel the urge to ask for the full payoff amount when selling the vehicle. However, having a price that is far above the true market value will alienate buyers, and you will have a difficult time selling the car while still making loan payments. Use a service like Kelley Blue Book to get an idea of private party selling prices for vehicles like yours.

Step 2: Advertise the Vehicle

Many auto sales start on the Internet. By advertising your vehicle online, you can attract buyers from all around the country. In addition to advertising online, you should also put a traditional "for sale" sign in the vehicle, and you may also want to advertise in a local paper.

Step 3: Prepare the Vehicle for Sale

Before allowing test drives, make sure the vehicle is in good mechanical shape, and it is clean. Paying to have the vehicle professionally detailed and reconditioned, if needed, can increase the value buyers will see in your vehicle. In addition to cleaning the vehicle, you should also call the finance company to confirm your payoff amount. Also ask to have a payoff letter mailed or faxed to you. This will let you prove the lien and payoff amount to prospective buyers.

Step 4: Close the Deal

When a buyer shows interest in your vehicle and makes an offer, try to counter if their offer is too low. While the negotiating process can be difficult, use research like that completed on Kelley Blue Book to your advantage while negotiating. Try to get an amount near the private party selling price listed on the service. Once you reach agreement on price, it is time to explain there is a lien that must be paid off.

Step 5: Complete Paperwork

The buyer will write you a check for the agreed-upon selling price amount. If they are financing the car themselves, their lender will require a copy of payoff letter you got in Step 3. Deposit the buyer's check in your bank account. Next, write a check for the payoff amount and send it to your lender to payoff the loan. Once paid off, you will receive the title to the vehicle which can be reassigned to the buyer.

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