Can You Sell Your Car With An Outstanding Loan?
You bought a car, owe money on it, but now need to sell it. For many people, this raises the question of can you sell your car with an outstanding loan on it?
The auto loan is perhaps the most common loan that we have in the United States. The reason is they are fairly easy to get. Lenders hand them out right and left because the risk associated with them is fairly small. The money is much less than involved in a mortgage and the term of the loan is also much shorter.
All that being said, the outstanding loan on your car is not meant to be an anchor around your neck. You can sell the car even though you still owe money on it. The question for many is how exactly do you do this? Well, the loan is not generally assumable by the buyer, which means you need to talk to your lender to figure out the process they have in place for handling the transactions.
The issue you have to be careful with is the lien filing on the car. You cannot just go out and sell the car because you don’t have title. Title is the filing with your state that shows who the owner is. It should list you and the lender. As long as both of you don’t sign off on it for the sale, the sale will not be valid. It is as simple as that and means that you need to deal with it.
There are two typical approaches. The first is to simply pay off the loan. Most people don’t have the money to do that, so they look for an alternative. For that to occur, you usually end up going with the lender to an office of the lender. The buyer then pays the money to the lender who takes out the outstanding loan amount and gives you the rest. The representative for the lender will then sign the title over to the buyer as will you. Again, this is the general approach used, but your lender might have a slightly different approach.
Can you sell your car with an outstanding loan? Absolutely. You just need to make sure you do involve the lender.