sell car still making paymentsIs it possible to sell a car if you are still making loan payments and the loan is not yet paid off?

This is a very common question with car buyers and owners.

The answer is yes, you can sell the car, but you must get enough money in the sale to pay off your loan, so that your bank can give you a “clear” title to give to the new buyer. This is where problems often arise. Let’s see how.

If you are upside down

If you are still paying on your loan, you still have an outstanding balance, which might be more than your car is actually worth. This means you are “upside down” and would need additional cash, after the sale, to fully pay off your loan. Loan companies want to be paid in full immediately after the sale. They won’t allow you to continue to make payments on a car you no longer have.

Be sure not to sell your car without knowing if you are upside down and knowing exactly how much you still owe. That way you don’t get into the problem of selling your car and finding out that the money doesn’t cover your outstanding loan balance.

Even if you intend to sell your car, possibly because you can’t afford the high payments, and buy a cheaper car, you still have to pay off your old loan before you buy another car. And you can’t simply trade cars thinking it might lower your loan balance and payments. And you can’t simply transfer one loan to another.

If you are not upside down

If your loan balance is less than the value of your car, then there’s no problem. You get the money from the buyer, use part of the money to pay off your loan and get the title, and put the remainder of the money in your pocket — possibly as part of a down payment on another car.

Check with your bank or loan company to determine your current outstanding balance or “payoff.” Use Kelley Blue Book ( to help determine the value of your car.

How does it work?

How do you sell a car that you are still have a loan on?

Here are the basic steps: Sell the car, use the money to pay off your car loan, get the car’s “clean” title from loan company or bank, give title to buyer, and buyer gets new title and tags from the local DMV office. Depending on the state, the buyer may pay sales tax.

Generally, a smart buyer will insist that he go with you to your bank so that he can write his check directly to the bank, have you add your additional cash if you are upside down, get the title immediately, have you sign over the title to him right then and there, and give him the car keys. That way, there are no delays and no mess. Nice and clean and quick.


So if you want to sell your car when you are still making payments, yes, it can be done. However, if you still owe more than your car is worth, it is much more difficult — and sometimes impossible.


Comments are closed.