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The short answer: yes. You can absolutely sell a car you’re still making payments on. All the outstanding loan does is add some extra steps to the sale process.

When you owe money on your vehicle, ownership technically belongs to your lender, even if you totaled the car. Whether it be a bank or a credit union, ownership belongs to them until your loan is paid off. Their name may be on the vehicle’s title or they may even hold the title until the car is paid off completely.

Regardless of what you want to do with your car — trade it in to the dealer or sell it to a private party — you’re going to need to know exactly how much you still owe on your loan, if it’s more or less than you’ll receive for selling your car, and the lender’s procedure for that kind of transaction.

The Payoff Amount: The amount left to pay to own your car outright. If you’re planning on selling your vehicle to a private buyer, it is imperative you ask your lender the payoff amount and how to handle the transaction.

for sale sign placed on a car

If your loan is from a local lender, they’ll likely ask you to bring the buyer in and have them sign paperwork. If the loan is with an online lender, they will probably connect you with a bank partner to complete the transaction.

Car Value: Figure out what your car is worth. You can utilize sources like Kelley Blue Book to find your car’s current private party value. You could also get a purchase offer from an online car buying service in order to get a solid grasp on how much your car is worth as well as a Plan B if any private sales fall through.

Equity Equation: You’re going to want to subtract the payoff amount from the value of the vehicle. Depending on the result, you either have positive or negative equity with this vehicle. If the result is positive, congrats — you have equity on this car. If it’s negative, however, you are what’s known as “Upside Down” on your car loan.

Selling a car while upside down means you have to give the lender the money from the actual sale of the car as well as pay for the negative equity.

Now that we’ve broken down the details, let’s dive into how things would likely play out under these circumstances.

Negative Equity & A Private Sale

When you’re upside down on your car loan, you’re required to cover the difference between the sale price and what you owe. For example, if you still owe $12,000 on your vehicle and the buyer agrees to purchase it for $9000, then you would pay the lender the remaining $3000.

Afterwards, you and a representative of the lender would sign the title and give it to the buyer in order for them to get a new title and registration.

While selling with an upside down loan may leave you with a chunky piece of change to pay off, you do have options. With good credit, you have the potential to take out a personal loan to cover the remainder.

If your credit is excellent, you may be able to procure an unsecured loan to cover the entire amount of the car, keeping the lender from being placed on the title. The title will be yours outright and you can repay the majority of the loan when you sell the vehicle.

Positive Equity & A Private Sale

If you’ve got positive equity during the sale of your vehicle, the buyer will end up paying the total to the lender. The lender will then pay the difference out to you. The buyer would also pay off the rest of your loan to the lender then proceed to give you the difference.

From that point, you and the lender sign the title and give it to the buyer. They take it down to the state’s department of motor vehicles and get a new title and registration.

Online Lenders

smiling woman on computer with coffee

Online lenders may require the entire balance of the loan paid off before they release the title. If you have the amount available, then pay off the loan. If you don’t, then you can ask the buyer to give the money to the lender and then have the title mailed directly to them.

This process, however, requires a high level of trust (typical of buyers with personal relationships to the sellers). Most buyers won’t want to participate in this process for that reason, along with the additional time it needs.

CarBrain Buys Cars You’re Still Making Payments On

If you’re looking to sell a car you’re still making payments on quickly, CarBrain is here to help. Specializing in less-than-perfect cars, CarBrain provides the perfect place for you to get fast cash for your car.

Contact us today and get a FREE quote for your vehicle in under 90 seconds. We offer FREE towing and FREE title transfer as well. Our goal is to make this as quick and hassle-free for you as possible!


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How Do I Sell My Car If I Still Owe On It?

You can sell a car you still owe money on. You have to figure out the value of the car, how much the buyer is paying for it, and subtract that from the total loan.

Can I Sell A Car I Owe Money On Before I Finish Paying Off The Loan?

No. Generally, you must fully pay off the loan before you can transfer the vehicle to another owner. This is because you cannot sell the vehicle without the title, and if you have a loan, you do not own the title. Your lender does.