How to Get a Title Release When Selling a Car Privately

You may need a title release for a car you're selling.

If you still have an outstanding loan against your vehicle, it can be a little complicated to sell the car to another party privately. The lender has the car title until you finish paying the loan off. Since the new buyer needs the title in order to drive away happily, you have to make special arrangements with your lender to close this type of transaction.

Instructions

1. Confirm that the buyer is definitely committed to purchasing the car from you. Draft a bill of sale outlining your agreement (see Resources for an example of a car bill of sale). Explain to the buyer that you have to make arrangements with your lender to get the title released to the new buyer's possession, which could take a few days or even weeks. Include a condition in the bill of sale that the transaction is contingent upon receiving the title release from the lender.

2. Call or visit your local department of motor vehicles office to ask for any paperwork you'll need to transfer ownership of the car to the new owner. In many cases, you'll just have to sign over the title to the buyer.

3. Call or visit your auto lender's office to inform them that you want to close your loan. If you have the funds available before the buyer pays for the car, pay off the car balance outright---this will simplify the process. The lender will then send you the title and release form stating that the car is lien-free.

4. Try to work out another arrangement with the lender if you have to wait until the buyer pays you to pay off the loan. Ask the lender if he'll release the title if the funds are transferred via escrow. In this case the buyer will have to set up an escrow account directing funds to the lender and deposit his payment there in lieu of receiving the title from the lending company. The seller must pay any additional money owed over the selling price. Once the lending company verifies that the payoff balance is in an escrow account and all other details of the transaction are in order, the company will release the title to the new buyer so that he can register the car in his own name.

5. Alternatively, ask the lender if you can arrange to bring the buyer to a local office of the lending company to close the account and complete the transaction. In this arrangement, the buyer pays the lender directly in your presence and receive the title in exchange. Sign the title over to the buyer to complete the transaction.

Tips & Warnings

• Have your lawyer look over your bill of sale agreement before you sign with the buyer.

References

• CarSearch: If Your Loan is Still Outstanding
• MSN: Selling a Car You Don't Own Free and Clear

Resources

• AutoCrisis: Example of a Car Bill of Sale