How To Sell A Financed Car Without Paying It Off - (2023)

If you want to sell a car under finance, you should first be able to answer the following questions:

The automobile industry is massive, and the used car business makes up a large percentage of it. The used car market is estimated to be valued at over 1.3 billion USD globally, showing no shortage of used car companies. So why choose Car Sell Zone over other businesses? There are several reasons we are the ultimate service for selling your car:

We aren’t interested in haggling or giving you a hard time to get the lowest possible price from you. We are only interested in providing fair rates and paying you promptly. If you have a bank-financed car with outstanding loan payments, we can help take care of that.

You still owe money on your car, but youre also ready to swap out its tired gears for a new set of wheels. Think youre out of luck until that loan is paid off in full? Think again. You can sell your car on CarGurus. But even if you decide to sell it to a dealership, unloading a car you still owe money on is easy and can be done in only a few steps.

Contact the lender who holds your car loan, and ask for the payoff balance. Then compare the loan balance to the estimated value of the car. That will tell you whether the car has sufficient value to pay off the loan, and allow you to walk away with some cash, or if you will need to write a check upon the sale of the car in order to pay off the loan.

This is an important step if you determine that the likely sale price of the car will not be sufficient to pay off the loan and/or provide you with enough cash for a down payment on the next car you want to buy, you will have to come up with that cash or you wont be able to sell the car. But you want to know that before accepting an offer from a buyer.

Naturally, the fact that you have a loan on the car will be a complication. Even if there is sufficient value in the vehicle to make the sale worth it, itll be harder than it would be otherwise because the lender holds the actual title to the vehicle.

If you’ve leased the car, you’re in a somewhat different situation. Obviously, you can’t sell it.You can return the vehicle to the dealer, but if it’s before the lease expires, you’ll likely face some stiff early termination fees. Plus, you will still owe the balance remaining on the lease andâto add insult to injuryâalso lose the upfront money originally paid.

However, drivers who want out of their contract ahead of schedule can take heart: There are a few options that allow you to circumvent the usually harsh termination penalties. One frequently overlooked pathâand often the least expensive choiceâis to transfer the lease to someone else.

It works like this. Suppose you have two years left on a three-year lease. Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies donât allow such transfers, the vast majority do. The trick is finding someone interested in taking the reins from you.

If you still want to sell your car that is financed, here is what you need to do:

Mail the title to them or take it to them. Give them a call and let them know you have the clean title now and ask them how they want you to get it to them.

Done thats it.

Some Notes

The buyer may want to go to the bank with you to pay off the loan and get the title. Dont sneer when they ask for this after all, youre using their money they should be able to go with you. Just set a time to both do this together. Call your bank or lender ahead of time and find out what you need to bring with you and when the best time is to stop in.

What Is Voluntary Termination

Voluntary termination is when you ask your finance company to end your finance payments early. This is usually only possible if you have paid over 50% of your owed amount off. There are a few other key things to keep in mind, too:

  • Due to interest rates and fees, reaching the 50% paid checkpoint of your finance plan wont be the same as reaching the halfway point in terms of date, i.e., it may take longer than you think
  • You can request voluntarily termination at any point after 50% is paid off, but you wont receive anything like a refund on interest if you choose to request it at, say, 70% paid-off
  • You will be able to end your payment plan early this way, but youll still have to pay the outstanding balance

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A Be Careful If You Trade It In

The biggest danger you face when youre underwater is making the situation worse. Dealerships will happily roll the negative equity from your trade-in into your financing on the next car you get. If you owe $15,000 but your car is only worth $10,000, youll be tacking that $5,000 difference onto your new loan. Its easy, fast and doesnt require you to dish out any cash up-front. But your monthly payments will be higher and youll be paying interest not just on your new car, but also on what you owed from the trade-in. If you do this over time as you move from car to car, the debt snowballs and can become unmanageable. If at all possible, your best bet is to stick with the car you have until you get your head above water, meaning you at least hit the break-even point on your loan. Even better is paying it down enough so your car is worth more than what you still owe, either by hanging onto it or making extra payments. If you are planning to trade in you car, read our guide on trading a car is when it is not paid off.

Selling A Car With Finance Owing Can I Do It

How to Trade in a Car that is not Paid Off | MONEY $AVING TIP$

Yes. You can sell a car with finance owing. This could entail selling to a dealer, as a trade-in for another vehicle, or, it could be a private sale. Either way, it is possible. However, there may be some extra steps involved when selling a car with finance owing. It really depends on the type of car loan you have.

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Is Your Car Encumbered

Your car may not have money owing against it, even if you borrowed money to fund its purchase in the first place, so you might not be encumbered.

For instance, if you have a mortgage and have redrawn against it, the house is the security, not the car. If you bought with a credit card or drew from an unsecured personal loan, the lender can’t use your possessions as security, so your vehicle is unencumbered. This means that the loan will apply to you, not your beloved but soon to be departed vehicle.

Personal loans and credit cards have higher interest rates than secured loans for this exact reason. Without a large-ticket item to use as security, there’s a larger risk the bank won’t get its money repaid in full. The larger the bank’s perceived risk, the higher the interest rate.

Have Someone Else Take Over Payments

Finally, you can try to find someone to assume your loan payments along with the car. You can advertise in market places such as Craigslist and eBay Motors to find potential buyers.

The person who buys the vehicle would assume ownership of the vehicle and they’d assume responsibility for the loan as well. But the dealership may require them to apply for financing, complete with a credit check, before they can take over the loan. If they don’t have solid credit, this option might not be doable.

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Can I Sell A Financed Car

The finance type you have purchased your car with will determine how and if you are able to sell it.

As a general rule, it all comes down to whether or not you are the legal owner and if you can become that under your agreement.

Its likely your provider will ask for a settlement fee if you have time remaining on your agreement and selling a car with any outstanding payments is illegal.

The four main car financing options available:

  • Personal loan

How To End A Pch Agreement Early

How To Sell A Financed Car Without Paying It Off - (1)

If you have a personal contract hire agreement or a car lease, its much more difficult to get out of the agreement before the end.In some cases you may have to pay off your whole leasing agreement even if you return the car early.

Depending on your exact contract you may be able to use early termination to bring the agreement to a close. However, this usually involves paying at least half of the remaining costs.

For example, if you had a three-year lease paying £200 a month and wanted to end the agreement after one year, it would cost you £1,200 .

If youre struggling to afford the lease, it might be possible to extend your agreement to reduce the amount you pay each month. Youll have to contact your finance provider to negotiate these terms.

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Here Are The Steps To Get The Hypothecation Removed From Your Rc Provided You Still Have A Loan Active Against It:

1. Visit your bank where the loan was issued

In both the cases where the loan amount is still pending or has been cleared, you need to get the HP removed from the RC in order to sell a financed car. To do that, visit the bank to get the loan foreclosure documents, specifying the amount of loan pending.

2. Clear the dues to get an NOC and Form 35

Clear the dues as per the loan foreclosure documents and you will receive the NOC along with two copies of Form 35 which is usually sent to your registered address. However, if you wish to procure the documents yourself, you can so by visiting the concerned bank.

3. Collect and submit the other documents needed to sell the car

After receiving the NOC and Form 35, collect all the other documents that are required to sell a car and submit them to complete the process.

How To Sell Your Rv With A Lien On It

Selling a camper with a lien on it isnt all that hard. You just have to be careful to follow through with all the procedures and make sure that the outstanding debt owed to the financial institution is properly repaid or that you meet their previously stipulated conditions.

Here are some steps you need to take to sell an RV that you owe money on:

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What To Do If You Can’t Make Your Car Payments

If you are struggling to make payments on your car loan and want to avoid harming your credit rating with a voluntary surrender or repossession, you have options:

If you are trying to rebuild your credit after a voluntary surrender, the most important things you can do to improve your scores are to make all future payments on time and keep your credit card balances as low as possible. You can also try boosting your FICO® Score right away by adding your positive utility, cellphone and streaming service payments to your Experian credit report with Experian Boost.

Thanks for asking,

How To Clear A Lien Off A Used Car

Car Flipping Secrets: How To Sell Cars Without Spending Any Of Your Own Money

A lien can be a game-changer when youre buying or selling a used car.

Because a vehicle is such a large purchase, it is common for car buyers to borrow money from a lender to cover the cost of their purchase, or to use their vehicle as collateral for another financial arrangement. Even if ownership of a vehicle changes, any existing liens will remain attached to that vehicle until they are formally discharged.

Anyone trying to sell their used car quickly and with little hassle should consider clearing any existing car liens before they list the used vehicle for sale. Horror stories of people buying a car only to discover it has a lien as its being towed away are enough to scare used car buyers into being vigilant about the lien status of the vehicle theyre considering.

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Tricky But Not Impossible

Those looking to sell a car while the bank holds the title will have to do a little more legwork, but its not impossible. Just be sure to go out of your way to ease the buyers concerns.

After all, the buyer is spending a large amount of money and he or she is acting on your word that youll send along the title.

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How To Sell A Car That Is Not Paid Off

You’ve decided to say goodbye to your car. Maybe you have an eye on another newer, shinier model, or you feel that you need to downsize your car and your payments, or you’ve decided you don’t need a vehicle anymore at all. Whatever the reason, you want to sell your car. The only problem is you still owe money on the car loan.

So, are you stuck with the car and the string of car payments that you currently have? Or is it possible to sell a car when you still owe money on it?

The simple answer to that last question is yes. But owing payments on a loan will affect the amount of money you get for your car and the amount of work you’ll have to do to collect that money. Frankly, the difference in time and effort can be vast. The process can take less than an hour, or it can take days or even weeks filled with delays, hassles, and paperwork.

What follows is a step-by-step guide explaining how to sell a car that is not paid off.

Heavy Diesel Commercial Motor Vehicles

How To Sell A Financed Car Without Paying It Off - (2)

Used heavy diesel commercial motor vehicles with a model year older than the current year require a valid emissions test pass when they are sold in order to transfer the ownership.

Applicable vehicles include transport trucks, pickup trucks, delivery vans, buses, tow trucks, dump trucks and cement trucks that have a registered gross weight of more than 4,500 kg and run on diesel fuel.

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Can you sell a financed car you owe money on? ›

Yes, you can sell a car with a loan, but the loan will have to be paid off before you can transfer the title to the new owner.

How do you sell a car before the loan is paid off? ›

The easiest way to handle the sale of a car that has a loan on it is to hold the sale at the physical address of the lender. This will provide you with the ability to collect the funds from the buyer, pay off the loan to the bank, and transfer the title to the new owner.

Does selling a financed car hurt your credit? ›

Sell the vehicle.

If your car is worth as much as or close to the balance on your account, selling it could enable you to pay off the loan without harming your credit.

How do I get rid of a financed car? ›

5 options to get out of a loan you can't afford
  1. Renegotiate the loan. You can reach out to your lender and negotiate a new payment plan. ...
  2. Sell the vehicle. Another strategy is to sell the car. ...
  3. Voluntary repossession. ...
  4. Refinance your loan. ...
  5. Pay off the car loan.
May 29, 2022

Can I sell my financed car to CarMax? ›

Will CarMax buy my car if I owe on it? Yes. You'll need to provide loan information so CarMax can pay off the lender. If you owe more than your offer, you will need to cover the difference.

Does voluntary repossession hurt your credit? ›

Voluntary Surrender on a Credit Report

That will be reflected on your credit report, as well. Both are serious negative marks on your credit, but a voluntary repossession may hurt your credit scores slightly less than a repossession.

How do you sell your car if it is still financed by the bank? ›

Sign a Power of Attorney or seller's agreement to give the new buyer the right to transfer the car to their name after clearing the bank loan. You must go with a buyer at the bank with cash or a certified manager's cheque of the car's value. At the bank, the buyer can pay the outstanding amount to clear the loan.

Can you transfer a car loan to someone else? ›

Contact the lender

In general, you'll have to close out your own loan balance. If you have the cash available to do this, great! If not, you'll pay off the current lender with proceeds from the new borrower's loan.

Will the finance company know if I sell my car? ›

When a hire purchase agreement is taken out, the finance company will automatically register it on the HPI and Experian databases. If you sell an automobile with outstanding finance on it without informing the buyer of the situation, it is likely that the finance company will track them down to repossess it.

How do you get rid of a financed car without hurting your credit? ›

Getting Out of an Auto Loan
  1. Refinance – If you want to keep your current car, but want a different auto loan, then refinancing is the way to go. ...
  2. Trade-in or sell the car – To get out of an auto loan contract without ruining your credit, you could sell the vehicle and use the proceeds to pay off your lender.
Jun 2, 2021

Does Carvana pay off your loan? ›

If you have a loan balance on the trade-in on top of the Carvana offer, we can help you pay off your new car loan by up to $2,500. Any additional negative equity will be added to your new car down payment.

What can you do with a financed car that doesn't run? ›

If You Find Yourself Upside Down On A Non Working Vehicle You Can:
  1. Pay off the loan.
  2. Roll over the debt into a new loan.
  3. Leave the car sitting while you pay off the loan.
  4. File for bankruptcy.

What happens if you want to return a financed car? ›

If you return the car to the lender, the lender will likely sell it. It will apply the proceeds of the sale to your car loan balance, after reimbursing itself for the costs of sale and certain fees.

Can you take your name off a financed car? ›

Removing a Co-Signer From a Car Loan Is Possible

You can request a co-signer release, refinance the loan, or sell the car and pay off the original loan. Carefully research each option on how to remove a co-signer from a car loan before taking any action.

Can you sell a car to CarMax that isn't paid off? ›

If your pay-off amount is more than our offer for your car, the difference is called “negative equity.” In some cases, the negative equity can be included in your financing when you buy a car from CarMax. If not, we'll calculate the difference between your pay-off and our offer to you and you can pay CarMax directly.

Can I sell my car to CarMax if im behind on payments? ›

Yes! CarMax will buy a car with a loan on it in most cases. Unless you're way too far upside down on the loan, CarMax is likely to purchase the car from you. If you want to sell a vehicle to CarMax that still has a car loan on it, schedule a meeting or walk into a branch near you.

How do you trade in a car that is not paid off? ›

When trading in a car with negative equity, you'll have to pay the difference between the loan balance and the trade-in value. You can pay it with cash, another loan or — and this isn't recommended — rolling what you owe into a new car loan.

Is it better to surrender your car or have it repossessed? ›

Voluntarily surrendering your vehicle may be slightly better than having it repossessed. Unfortunately, both are very negative and will have a serious impact on your credit scores.

How long does a voluntary surrender stay on credit? ›

Voluntary surrender and repossession are loan defaults, which stay on your credit reports for seven years. That type of negative mark will harm your scores, especially your automotive-specific credit scores. The next time you apply for a car loan, you'll likely be deemed high risk and charged high interest.

How many years can a repo stay on your credit? ›

A repossession stays on your credit report for seven years, starting from the first missed debt payment that led to the repossession. In the credit world, a repo is considered a derogatory mark.

Can you transfer loan payments to another person? ›

Key Takeaways. In most cases you cannot transfer a personal loan to another person. If your loan has a cosigner or guarantor, that person becomes responsible for the debt if you default on the loan. Defaulting on a personal loan is seriously injurious to your credit score.

Can I transfer loan to another person? ›

The answer to this is, yes, you can transfer your personal loan to another person. There are some Banks or Non-Banking Financial Companies that provide such facilities.

How soon can you take a cosigner off an auto loan? ›

You Can Release Your Cosigner

When you refinance, you pay off all of your old auto debt and start making payments on the new loan. Since the old loans are paid off, the cosigner of those loans will be released.

What happens if you sell a financed vehicle? ›

In order to legally sell your car, you must settle any outstanding finance first. If you are caught knowingly deceiving someone into buying a car with outstanding finance, you will be made to pay back what you owe to the finance company. You may also face legal action.

Can you transfer a auto loan to another person? ›

To complete the car loan transfer, the potential new owner will need to file a new loan application with the current lender. They'll need to go through the loan approval process (including a credit check) before they can be approved to assume your car loan. Transfer ownership.

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