How to sell a car if you have an existing loan

There are many reasons why you would want to sell your car after some time; maybe you need the newest model in the market, your priorities have changed, or you are in a financial crisis, and you are in urgent need of cash. However, you may want to sell your car with an existing loan, and here are a few tips to help you put your vehicle back on the market.

It is possible to sell a car with an existing loan. Note that the price of the vehicle should not be less than the amount of the unpaid loan; in this case, you have to look for other means to settle the loan balance.

How it works

We have a few tips to help you sell your car

Determine payoff amount.

Your lender is the only person with the proper estimate on your loan. This may include all other penalties and fees that have accrued over time. An official payoff letter is, therefore, mandatory. It states the amount and instructions to finish the payment.

Your lender may know the potential market for your car. Ask questions regarding car resells. This can potentially run smoother for you than other options.

Paying the loan

The most recommended way to sell your car is to clear your car loan earlier. It provides a clear title easier to hand over to the buyer. Dealing with a vehicle with pending loans may take some time. Some lender terms do not allow this. Finding a buyer will also be a hustle since no one wants to associate with incomplete documents.

Getting the lien holder's name of the title can be a hustle if you do not have the money in hand. Consider borrowing from a willing lender with a lower interest rate and a shorter payment period; you can repay the loan after selling the car.

The value of your car is much more critical and will help you negotiate fairly with your buyer and avoid losses.

Your car might be of less value than the money you owe. The only way you will have to settle your loan is to find other alternatives to finish up your debt. However, there are two effective solutions. You either will have to postpone the purchase till you can afford to pay the loan, or you can choose to proceed if you can source the money.

Provide a clear title to the buyer.

Title transfer is the final stage in this kind of business. You have to sign it off to indicate a change of ownership from you to the buyer.

Selling a car to a dealer is more convenient than selling it to a private buyer. They have potential buyers and a ready market. They also handle the paperwork transactions behind the scenes on your behalf for as fast as a day. This, however, does not come for free. You might end up selling your car for less than its worth due to the processing fees they charge on their services.

A private buyer is an ideal customer in such a scenario. You make a sale much more worth your car's value. It's even quicker if you know the person you are selling to, and he trusts you. The only risk with private buying without finalizing the title and ownership is law enforcement on vehicle registration, car repossession, or even theft accusations.