Selling your car presents an opportunity to earn a profit that can be used toward a new vehicle or to add a cushion to your savings. No matter the reason you plan to sell, understanding the process of a private car sale can help you expedite the transaction once you find a buyer. If the car is not paid off, the transaction is similar, but you must go the extra step of closing the original loan with the lender so the buyer owns the car free and clear.
Contact your lender to determine the correct procedure to close out your loan. Be sure to request a lien release so the title is cleared.
Select an escrow service if you are unable to pay the loan in full in advance of the sale using your own money. There are a variety of third-party services that allow you to close out your loan and transfer ownership in one transaction. Once the seller brings certified funds for the car, the payment is deposited into the escrow account. The bank takes the money from the escrow account to close the balance of your loan.
Transfer the title to the buyer once the loan is paid in full. It is essential to transfer the loan immediately to avoid personal liability for the vehicle, especially if the buyer does not yet have insurance.
Tips & Warnings
- If the sale price of your car does not cover the entire balance of the loan, you must pay the difference at the time you close the loan.
- It is possible to use a lump sum payment from a buyer to pay off your loan in the branch of the credit union or bank that manages your loan. However, transfer the title immediately after choosing this option to reduce your liability.
How to Sell a Car
Article provides useful and practical information about effectively selling a car and keeping the transaction legal.
How to Trade In an Unpaid Car
If you are in the market for a new car, but still have a car that you are paying a loan on,...
How Do I Sell a Vehicle That Has a Loan?
Automobile owners wishing to sell their vehicle with an existing lien (auto loan) may do so at any time during the time...
How to Sell a Financed Car to a Dealer
Selling a financed car to a dealer is necessary in several situations. If you simply do not need the vehicle and want...
How to Sell a Car Without Registration
You may have to take some extra steps to sell a car that hasn't been registered or needs a renewal. The vehicle...
- How to Sell a Car Left at a Mechanic's Shop
How to Trade in a Car That's Not Paid for
Trading in your old car is part of the car-buying process. And with 60- and 72-month payment terms available, so is buying...
How to Sell a Car You're Still Paying On
Many people find themselves with a car that they are still paying on that they want to sell. This happens for a...
Can They Put a Lien on My House If They Repossess My Car?
There are two legal components to an auto loan. The first component is your unconditional promise to repay the money you borrow....
Do I Pay Taxes When I Sell My Car?
In most situations, you won’t owe any tax on the sale of your personal vehicle. However, you might incur a tax bill...