Selling a car when you still owe money on it can seem challenging, but it’s definitely doable with the right approach. Whether you’re looking to upgrade, reduce your expenses, or simply make a change, this guide will walk you through the process of selling your car while you still have a loan balance.
When you have a car loan, the lender owns part of your car until you pay it off. This means you need to settle or transfer the loan before the new owner can take the car. While this adds some steps, it shouldn’t stop you from selling.
Before you sell, think about:
First, check how much your car is worth using trusted sites like Kelley Blue Book or Edmunds. This will help you set a fair price and see if you have positive or negative equity. Selling your car privately usually gets you a better price than trading it in at a dealership, so compare both options.
Contact your lender to find out how much you owe. This is called the payoff amount and might be different from your remaining loan balance due to interest. Ask if there are any penalties for paying off the loan early.
To determine your car's equity, you'll need to understand two key terms: Positive Equity and Negative Equity. Positive Equity occurs when your car's value exceeds the amount you owe on your loan, allowing you to pocket the difference after paying off the loan. Negative Equity happens when you owe more than your car is worth, meaning you'll need to cover the gap between the loan balance and the car's value.
Before you sell, talk to your lender. They may have specific instructions or deals with car dealers to help with the sale. They also hold the car title, so you'll need their help to transfer it to the new owner.
If you owe more than your car is worth, you have a few options. Refinancing your loan could lower your monthly payments and help you build equity faster. A personal loan might help cover the gap if you decide to sell but be careful of high interest rates. Lastly, you could use savings to pay the difference and avoid more debt.
Selling a car with an outstanding loan involves some extra steps, but with planning and research, it’s manageable At Dells Auto we can help you navigate through the selling process today. Whether you have an outstanding payoff, need to sell your car, or want to trade up, visit us today, and let's explore your options to ensure you get the best deal!
Ready to sell your car? Explore your options and start planning today!