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Even if you have a loan, you can still sell your car privately. You can work with your bank to arrange a payoff method that allows you to use the buyer’s funds to pay off your remaining loan. Check out the steps below to learn how to sell your car privately with a loan.
How to Sell a Car Privately with a Loan?
Step 1: Find Out How Much Your Car is Worth
Finding out how much your car is worth is possible through platforms like Kelly Blue Book and Edmunds. You only need to provide details about your car, such as year, make, model, and mileage. It’s also important to describe your car in detail.
Another way to determine how much your car is worth is by checking similar ones on car-selling websites, like eBay Motors. Take several prices of cars similar to yours and get the average.
You’ll also find car-selling websites where you can get an instant offer, like Carvana and Peddle. Besides finding out how much they can buy your vehicle for, you’re also under no obligation to sell.
You can also check out CarBrain. How this works is pretty straightforward. Just fill out the online form on its website with your car’s details and receive an instant offer in minutes. According to the reviews on Trustpilot, CarBrain is a reliable company that provides fair quotes for any types of cars.
CarBrain Summary
Get an online offer within 2 minutesGet cash for your car in under 48 hoursCarBrain buys cars in over 7 conditionsUp to 7 days to accept CarBrain’s offer
Step 2: Check Your Payoff Amount
You’ll need to determine your payoff by reaching out to your lender. Note that the payoff amount may be different than your current balance, as this includes the following:
Loan balance
Interests up to a specific date
Any related fees
Generally, the payoff amount is valid for 10 days, though it may vary across lenders. To get this information, you can contact your lender by phone or request it through their website.
You might also want to check the Truth in Lending Act disclosure on your loan amount and find out through your lender if you have a prepayment penalty.
Step 3: Consider Your Car’s Equity
Equity is essential in selling a car privately with a loan. After all, this refers to the difference between how much your car is worth and your payoff amount. It determines whether you can make money from the sale or otherwise.
Your car can have either positive or negative equity. Positive equity happens when your car’s value exceeds your payoff amount. For example, your car is worth $16,000, and your loan balance is $13,000. In this case, the vehicle has a $3,000 positive equity.
On the other hand, negative equity means your loan amount is greater than the vehicle’s value. This is also known as being “upside down” on your loan.
Suppose your car is valued at $13,000, and you still owe $16,000. You’ll have to pay the $3,000 difference to settle the loan and privately sell your car.
Step 4: Talk to Your Lender About the Sale
Once you get an idea of your vehicle’s equity, it’s best to discuss your intention to sell with your lender. Doing this can help you determine not only the equity position of your car but also the payoff process and requirements to finalize the sale.
Step 5: Find Out Your Options with a Positive Equity
Positive equity is a preferable choice if you’re selling your car with a loan. Besides not having to get cash out of your pocket to settle the loan, you’ll also make some money from the sale.
You can use the money to transfer the title and even finance your next car. One way to sell and achieve positive equity with your auto loan is by taking a personal loan if you have good credit.
You can use the personal loan to pay off your auto loan and get the title. Once you have the title, you can proceed to sell your vehicle and use the proceeds to settle your personal loan.
This can be an excellent step to remove the auto lender from the picture and get a clear title to sell your car privately. Additionally, this can be advantageous in case your lender wants the full payoff amount before you can sell your vehicle.
Step 6: Check Your Options in Case of Negative Equity
If your car has negative equity, you should check your options before selling it. One of these is that you’ll cover the difference out of pocket. Depending on the amount, you might want to tap into your savings or other fund sources.
Another is to work it out with your lender, who might have refinancing options that can work for you. You can also contact another credit union or bank about refinancing your loan to a lower APR.
By considering refinancing, you can look for lenders with lower interest rates than your current lender. You also have the option to extend loan terms. Either way, you’ll have better chances of moving towards positive equity or less negative equity.
Finally, you can continue making payments until you reach positive equity. You can make extra payments or larger monthly payments to build equity faster.
Just ensure your vehicle is in good condition and the mileage low, as these also affect the equity.
Step 7: Get your Buyer in the Loop
When posting your sale, you’re free to leave out the details about having a loan on your car. But once you have a serious buyer, you’ll need to get them in the loop. Tell them your loan status and that your lender knows about the sale.
Some buyers might be skeptical about buying vehicles with loans. Informing them of your loan status and the steps you’ll take to settle the loan can alleviate their concerns.
Getting your bank or financial institution involved can also give your buyer the confidence that the sale is being completed on the right track.
Should I Pay Off My Car Before Selling It?
To legally sell your car, you need to have the title first, which isn’t the case if you still have a loan on it. It’s why paying off your loan first is the most advisable in this scenario. The challenge will come depending on whether your car has positive or negative equity.
With positive equity, you’ll make money out of the sale. If you have good credit, you can get a personal loan to settle the loan.
Meanwhile, considering refinancing on negative equity can help you get a lower APR and better loan terms to build positive equity.
What is the Best Way to Sell a Car with a Loan?
The best way to sell your car with a loan is through a private buyer. If you have negative equity, you can opt for refinancing to build the equity quickly.
Once you have positive equity, you can use the sale proceeds to settle the auto loan and process the title transfer. You might even get extra cash for your next vehicle.
If the lender wants you to settle the payoff amount first, you can consider taking a personal loan. Then, you can use the proceeds from the private sale to pay off the personal loan.
Tips to Get More Money When Selling a Car with a Loan
Getting more money when selling your car with a loan is possible these days. You can go over dealerships that offer credit for your car and come across ones that offer to pay off your loan and match that amount in cash for you to get a new car.
If you’re aiming to sell a car privately with a loan, you can look for refinancing with a lower APR. Along with that, keeping your vehicle in top-notch condition and the mileage low can help you build equity faster.
If you’re taking a personal loan to pay off the auto loan, consider the associated fees and compare these with other financing options.
Fastest Ways to Sell Car with a Loan
CarBrain
CarBrain Summary
Get an online offer within 2 minutesGet cash for your car in under 48 hoursCarBrain buys cars in over 7 conditionsUp to 7 days to accept CarBrain’s offer
CarBrain is a well-trusted car-buying company that has been operating since 2007. CarBrain offers a quick and hassle-free way to sell used cars even if the loan has not been paid.
CarBrain will assist you with the process of selling a financed car, but either way, you will need to either pay off the loan on the damaged car or transfer the loan to your new vehicle.
One of the biggest advantages of CarBrain is that it offers quick car tow service free of charge and will take care of all the paperwork for you.
Carvana
Carvana Summary
Get an online quote within 2 minutesFree pickup wtihin 100 miles of a hubOffer valid for 7 days or 250 more milesHaggle-free process to sell your car
To sell a financed car to Carvana, you must provide your loan payoff information. If you owe more than your car’s worth, you will need to cover the difference out of your pocket, but if the vehicle is worth more, you’ll receive the difference in your bank account.
Carvana also offers a trade-in service, so if you owe less than the car’s worth, you can apply it toward purchasing your next vehicle from Carvana.
To get an offer from Carvana, you only need to provide your car’s license plate number or VIN and some basic details about the condition. The offer will be valid for seven days or an additional 250 miles.
Carvana also offers a free car tow service and will pay by check.
CarGurus
CarGurus Summary
Receive payment within 3 working daysFind out the market value of your carList your car for sale in under 5 minutesUp to $75,000 in protection for your sale
CarGurus is another company that buys financed cars 100%. To sell such a vehicle, you need to enter your VIN or license plate number and a few details, such as the vehicle‘s location and mileage and a photo of its registration.
CarGurus then will source an instant offer for you from a network of thousands of car dealers.
Once you accept the offer, CarGurus will arrange car’s pickup free of charge and will pay you within two business days via check or direct deposit.