Is 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. Continue reading How Do I Sell a Car That I Am Still Making Payments On?
What is the car trade-in process? Do I lose money by trading?
Here is how a car trade works.
Car dealers buy your old car from you and give you credit toward the price of a new car. The trade-in credit is like a down payment and reduces the price of your new car, making your monthly payments smaller.
The dealer then puts your old car on his used-car lot to sell, or he sends it to a dealer car auction where another dealer will buy it to put on his own used-car lot.
Contrary to some belief, dealers don’t simply “trade” or swap one car for another. It’s two separate transactions rolled into one contract.
Dealers make a lot of profit on selling used cars they’ve taken as trade-in. They pay the trading customer a low wholesale price, and sell the car for a higher retail price. That’s how they make their money and stay in business. Continue reading How Does a Car Trade-In Work?
If you still owe more on your loan than your car is worth, you are upside down.
You may still be able to buy another car if you are upside down on your previous loan.
There are two ways to go about it.
One way to buy with an upside down loan
You could sell your old car but you will have to add extra cash to fully pay off your old loan. You’ll need to pay off your loan so that you can give a clear title to your buyer. However, coming up with extra cash might be a problem, especially if you are upside down by a large amount. For many people, this solution is not possible.
Let’s look at some other ways. Continue reading Can I Buy a Car if I Am Upside Down on Another Loan?