Selling a car requires a lot of processes, and if you owe money on the car, it can even require more processes. However, this is a common transaction that goes around between the lender, owner of the car, and the buyer, it is nothing out of the ordinary. The right channels and steps have to be followed so that there are no issues. We will see the various options that can be explored when you need to sell a car that is financed.
There are two main ways to go about selling a car that you owe money on.
- Transfer the title to the Buyer: This is safe for both parties and can be an easy option to explore in selling a car that you still owe money on.
- Pay off the debt: The other option is to pay off the loan, probably from the money you get from your buyer and your personal money.
Get a Payoff Amount
Ask your lender the exact amount you need to make to pay off the loan. Once you make this payment, the lien on your car will be released.
To make the entire process official, get a payoff letter in the form of a document from your lender. The payoff letter should include details of how much your payoff amount changes from day to day, and instructions for completing the final payment. Remember, interest charges might accumulate before the time you eventually make payment, having this document will give you an idea of what accumulates per day. This will get you prepared on the day you wish to pay off the loan.
To sell the car, you will need to pass the title to your buyer. This means you have to sign the back of the title to indicate that you are transferring ownership to the buyer. In some state, the title will serve as a bill of sale, that will enable the buyer to register the car in his or her own name. Some buyer may decide not to pay until you have gotten a clear title for the car. Having a clear car title can help you understand how much you can get on a car title loan if needed.
Payoff the Loan
This option is very easy, if you have the means of paying off the loan, pay it off and get a clear title that will enable you to sell the car. Most buyers will love this option as they will not want to be entangled in the process of paying off your loan. Not having a clear title might scare off some buyers almost immediately. Paying off a loan is crucial. This is especially true if you need emergency funds in San Diego or an auto title loan quickly! Educate yourself on your finances and what you need to get yourself back on track.