How to Sell a Car You Still Owe Money On!
By Miley K. —
Published February 21, 2018
Selling a car on which you owe money on can be a complicated process. There could be several reasons as to why you are doing this. Your new car could be bringing you more expenses than you initially thought or you might want to trade the car and the auto loan in exchange for a new purchase.
Whatever the reason, selling off a car that already has a loan on it will take time and some serious effort on your part. Nevertheless, you may be able to get it done.
Take a look below to find out how you can sell a car that you owe money on.Determine the remainder of the loan
Before you decide to sell your car, determine how much of the loan is left for you to pay off. You can call your lender or bank who has the title to your car and get a detailed account of the remaining amount. Also, inquire the terms of selling such a car to a third party.Can you use the buyer's money for the payoff?
Once you have determined the total amount you have to pay, try contacting interested buyers. A number of sellers use the buyer's money to pay off the loan on the car. This is, however, a rather tricky situation and not many buyers will agree to pay you the amount that is to be repaid on the loan. In such cases, either the buyer has to be willing to take a chance or you should be willing to explain the circumstances to the buyer with the help of a representative of the bank or lending agency that financed the car loan.
If your buyer does not agree to this transaction, you may have to use your own money to pay off the loan and selling the car might not be in the books for a while.
If your buyer agrees to pay the money upfront, then once the loan amount is paid off, either the bank or the lending agency that financed your auto loan will be required to transfer the title of the car either directly to the buyer or to the buyer's bank. You will be required to sign off the title as soon as the sale is finalized and the loan is closed.
If you are planning to pay off the loan amount as soon as you sell the car, a wise move would be to ask your lending agency or bank to authorize a payoff letter. A payoff letter is a legal document that contains details about the amount of money required to pay off the loan and how this amount will change with changing interest rates. The document helps you to close off the payment in one attempt and you will be aware of exactly how much you will have to pay in order to close the loan.Alternatives to selling a car you owe money on
• Another way to sell a car you owe money on is to find a loan with an interest rate that is lower than the rate on your current loan. Such a loan will help you to pay off the remaining auto loan so that you can proceed with selling your car. This is quite convenient since you will be able to sell the car at your will. You will need to do some research in order to narrow down your best options. Online lending agencies offer inexpensive, peer to peer loans. You can also ask for personal loans from your bank or a credit union to pay off the current loan.
• If the above option does not work out, you can choose to sell to a dealer. The advantage is that since dealers handle such transactions frequently, they will take care of the paperwork and the other obligations. The disadvantage is that you won't make as much money selling to a dealer as compared to what you would make when selling to a private buyer.