Hey there, car sellers! If you’ve still got an auto loan hanging over your head, selling your car can seem as complicated as deciphering ancient hieroglyphics. But fear not, because we’re here to break down the process into easy-to-understand steps. Let’s dive into what you need to do to sell your car even when you owe money on it.
Understanding Your Loan Balance
First things first, you need to know how much you owe. This is your loan payoff amount, and it’s the key to determining your next steps.
1. Check Your Loan Balance
- Contact Your Lender: Reach out to your lender to get the exact payoff amount. This includes the remaining balance plus any interest or fees.
- Compare with Your Car’s Value: Use online tools like Kelley Blue Book or Edmunds to find your car’s current market value. This will help you understand if you’re underwater (owing more than the car’s worth) or have positive equity.
Deciding How to Sell
You’ve got options when it comes to selling your car. Let’s look at the main routes and how to handle each with an auto loan.
2. Selling to a Private Buyer
This can get you the most money, but it involves a bit more legwork.
- Full Disclosure: Be upfront with buyers about your loan situation. Transparency builds trust.
- Arrange Payoff with Buyer: Coordinate with your buyer and lender to pay off the loan. The buyer will likely pay your lender directly, then you’ll transfer the title to the buyer.
- Clear Title Transfer: Once the loan is paid off, your lender will release the lien, allowing you to transfer the clear title to the buyer.
3. Trading In at a Dealership
Trading in is convenient but may offer less money than a private sale.
- Dealership Handles Payoff: The dealer will pay off your loan as part of the trade-in process. They’ll subtract the loan balance from your trade-in value.
- Negative Equity: If you owe more than the trade-in value, the dealer will roll the negative equity into your new loan. This means you’ll owe more on your next car.
4. Selling to an Online Car Buyer
Companies like Carvana or Vroom can simplify the process.
- Get an Offer: Submit your car’s details online and get an offer. They’ll handle the loan payoff and title transfer.
- Convenient but Potentially Lower Offers: Online buyers often offer less than private sales but more than dealerships.
Handling Negative Equity
What if you owe more than your car is worth? Don’t worry, you’ve got options.
5. Pay the Difference
- Out of Pocket: Pay the remaining balance out of pocket when selling or trading in.
- Personal Loan: Consider taking out a personal loan to cover the negative equity if you can’t pay out of pocket.
6. Roll Over the Balance
- New Loan: If you’re buying a new car, you can roll over the negative equity into your new loan. Be cautious, as this increases your new loan amount and monthly payments.
Completing the Sale
Once you’ve navigated the payoff and buyer arrangements, it’s time to seal the deal.
7. Pay Off the Loan
- Funds Transfer: Ensure your lender receives the payoff amount from either the buyer, dealer, or yourself.
- Lien Release: Obtain a lien release document from your lender once the loan is paid off. This is essential for transferring the title.
8. Transfer the Title
- Clear Title: With the lien released, you can transfer the clear title to the buyer. Ensure all necessary paperwork is completed and signed.
- Bill of Sale: Provide a bill of sale to the buyer, documenting the transaction and terms.
9. Notify the DMV
- Vehicle Transfer Notification: Notify your local Department of Motor Vehicles (DMV) about the sale to avoid any future liability issues.
Conclusion: Smooth Sailing to Your Next Ride
Selling a car with an auto loan might seem daunting, but with these steps, you can navigate the process smoothly. By understanding your loan balance, choosing the best selling method, handling negative equity, and completing the sale correctly, you’ll be on your way to your next ride in no time.
