Selling a car with an outstanding loan payoff might seem complicated, but it’s manageable with the right approach. Whether you’re looking to upgrade, reduce expenses, or simply make a change, this guide will walk you through the steps to sell your car smoothly even if you still have a loan payoff balance.
Understanding Loan Payoff Basics
When you have a car loan, the lender owns part of your car until you pay it off. This means you need to settle or transfer the loan before the new owner can take the car. While this adds some steps, it shouldn’t stop you from selling.
What to Consider Before Selling
Before you sell, think about:
- Loan Balance vs. Car Value: Check how much you owe on the loan compared to what your car is worth.
- Financial Goals: Make sure selling fits your financial plans, especially if you owe more than the car is worth.
- Lender’s Policies: Ask your lender what their rules are for selling the car, including any fees.
How to Sell a Car with a Loan
Step 1: Find Out Your Car’s Value
First, check how much your car is worth using trusted sites like Kelley Blue Book or Edmunds. This will help you set a fair price and see if you have positive or negative equity. Selling your car privately usually gets you a better price than trading it in at a dealership, so compare both options.
Step 2: Get the Loan Payoff Amount
Contact your lender to find out how much you owe. This is called the payoff amount and might be different from your remaining loan balance due to interest. Ask if there are any penalties for paying off the loan early.
Step 3: Know Your Car’s Equity
To figure out your car’s equity, there are two things to know: Positive Equity and Negative Equity. Positive Equity means your car is worth more than what you owe, so you’ll get money from the sale after paying off the loan. Negative Equity means you owe more than the car is worth, so you’ll need to pay the difference.
Step 4: Talk to Your Lender About your Loan Payoff
Before you sell, talk to your lender. They may have specific instructions or deals with car dealers to help with the sale. They also hold the car title, so you’ll need their help to transfer it to the new owner.
What to Do If You Have Negative Equity
If you owe more than your car is worth, you have a few options. Refinancing your loan could lower your monthly payments and help you build equity faster. A personal loan might help cover the gap if you decide to sell but be careful of high interest rates. Lastly, you could use savings to pay the difference and avoid more debt.
Make Selling Your Car Easy
Selling a car with an outstanding loan involves some extra steps, but with planning and research, it’s manageable. At CARMART we can help you navigate through the finances of the car-selling process today. Whether you have an outstanding loan payoff, need to sell your car, or want to trade up, visit us today, and let’s explore your options to ensure you get the best deal!
Ready to sell your car? Explore your options and start planning today!