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Just like people sell houses with outstanding loans, you may one day figure out how to sell a financed car without paying it off. Selling a car you still owe money on can be complicated, but it is possible. Once you understand the process, you should be better prepared.
Sell a car in 4 steps if you still have a loan
You cansell a vehiclein many different ways. You can sell it to a private individual, sell it to a trader or...trade itand try to get a loan to purchase a new car. However, in all these circ*mstances, there are some important steps you need to take when trying to figure out how to sell a financed car without paying it off first.
Here are the four most important steps for selling a vehicle you still owe money on:
Gather information about your loan
Before you talk to anyone about buying your car, you'll want to know how much money you owe. You can gather this information by asking your lender about the down payment amount on your loan.
The payoff amount is the amount you need to pay to wipe out the balance on your existing car loan. The number may differ from the balance on your loan statement due to factors such as interest calculation, prepayment penalties and more.
Calculate the equity of your vehicle
Then use a price guide to find the estimated value of your vehicle. This amount can vary depending on whether you want to sell your vehicle to a private individual or trade it in at a car dealer. Once you have your estimated vehicle value, you can use the simple formula below to calculate your car's equity:
Vehicle Value – Payout Amount = Vehicle Value
If your car's equity is a positive number, you may be able to sell your car to someone else and make enough to pay off the loan (and possibly put some extra money in your pocket). Negative equity means that the value of your vehicle is not high enough to pay off your outstanding loan balance.
If you want to sell a financed vehicle with negative equity, you will need to pay the remaining loan balance out of pocket or convert this amount into a new loan. It is important to proceed cautiously with either approach, especially when new financing is involved. The decision to go even further into debt can have long-term financial consequences.
If you decide to take out a new car loan, acar payment calculatorcan help you figure out how trading a vehicle with negative equity can affect overall costs.
Talk to your lender
When you take out a loan to buy a car, the lender is the actual owner of the vehicle until you pay off the debt. The lender will also place a lien on the vehicle to protect its investment. You must pay off the loan in full before the lender releases the lien and title so you can resell the vehicle to another party.
If you plan to sell a vehicle that you still owe money on, you should first talk to your lender to see how to proceed. Each lender has its own process when it comes to these types of transactions. For example, at a bank or credit union, the lender may ask you to take the buyer to your local branch to pay the loan balance (either in cash or with your own financing). If the buyer has agreed to pay you more than the deposit balance, he or she can pay you the remaining amount in a separate transaction.
Check your credit reports
Regardless of whether you sell your car to a private individual or trade it in for a new car, it is important to follow up afterwards and ensure that the original loan is paid off in full. The best way to confirm that the loan now shows a zero balance is to check your three credit reports. You can consult your credit reports once every 12 months for free at
If a lender or credit bureau has not updated your loan balance to zero after 30 to 60 days, you may be able to dispute the error with the appropriate credit reporting agency. The Federal Trade Commission has one
In short
Figuring out how to sell a financed vehicle without paying it off first may involve a lot more legwork than selling a vehicle you already own, but it is possible. If you think selling a vehicle you still owe money on is the right financial move for you, these steps can help you navigate the process.
This page is for educational purposes only. The third parties mentioned are not affiliated with Capital One and are solely responsible for their opinions, products and services. Capital One does not provide, endorse or guarantee any third party product, service, information or recommendation mentioned above. The information in this article is believed to be accurate at the time of publication but is subject to change. The images shown are for illustrative purposes only and may not be an exact representation of the product. The material on this site is not intended to provide legal, investment or financial advice or to indicate the availability or suitability of any Capital One product or service for your unique circ*mstances. For specific advice regarding your unique circ*mstances, please consult a qualified professional.
