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Can you sell a car when you still have a big car loan to pay off?

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2010-03-20 13:11:41
2010-03-20 13:11:41

As the vehicle owner, you can sell the car whenever you choose. You are liable for the car loan. If you are selling the vehicle for less than the loan (especially when you are upside-down on the loan - you owe more than the car is worth), you need to pay the difference to your lender.

When trading the car in to a dealership (in effect selling it to the dealer) the dealer should handle the loan payoff details. You need to inform both your lender and your state DMV that the vehicle is being sold. The lender will release the lien against the vehicle after they receive payment from the dealer.

Selling to another individual is harder. It is best to work with your lender and find out how they prefer to handle the transaction. You will need to supply the buyer with a clear title, but you can't get a clear title until you lender releases the lien on the title, which they won't do until they receive payment. Many lenders have a standard way of handling individual to individual vehicle sales.

For example, for a car with a loan greater than the sale price of the vehicle:

In Michigan, go to either a Bank or a Credit Union and get approved for a loan around the difference in price you are looking at. Then, when you find a buyer and agree on a price, you will go to the bank or credit union, and get the loan. You and the buyer must go to whoever holds the lien on your car, and you both pay your amounts owed on the car. The lien holder will sign the title releasing the lien, and you are free to take the title in to the DMV. It varies from state to state, but this is how it is done in Michigan.

Related Questions

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You don't sell the car until the loan is paid off and pink slip is in your hands.

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If you mean you still owe money on the car you don't sell it unless you can take the money and pay off the loan. The bank really owns your car and the pink slip, so if you sell it without the loan getting paid you still owe the money to the bank.

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If you can get enough out of the car to pay off the loan then just sell it. If you are upside down on the loan, they that presents a real problem. You may have to just sit on the car until you pay off enough of the loan to be able to sell it an get enough to pay off the loan. You could also sell it and take out another loan that will cover the deficiency, but that may not be a good decision if you are financially strapped.

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If the car is worth less than you owe on it, you can try to get an unsecured loan from a local credit union or a local bank. You could also try to ask whatever financial institution has your car loan for an unsecured loan for whatever the car doesn't bring when you sell it.

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You cant. The loan in your name must be paid off by you. So if you plan to make any money off your car you will want to sell it for more then what is still owed.

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