How to Sell Your Car When You Still Owe Money on It

Look, times can get tough. Maybe the car you purchased isn’t what you expected. Maybe you’re moving on from having a vehicle. Maybe the payments are too high. Regardless of your reasoning, if you are ready to move on from your vehicle but haven’t paid it off, things may seem desolate. Have no fear. Here’s how to sell your car when you still owe money on it.

It Is Possible

First, let’s get this out of the way. Selling a car that’s not paid off seems like an impossible task. There’s paperwork to be had, numbers to crunch and hands to shake. Ultimately, we’re not all proficient in the way of used car dealing. But, you can sell your car when you still owe money on it. In fact, it’s common.

While selling your unpaid vehicle is possible, it may result in less profit than a normal deal. But, this comes with the territory. You’re getting out from under the string of a loan. It takes time and effort. Don’t expect to move on within a day. Patience, patience, patience.

How Much Money Is Left on Your Loan?

It is time to crunch some numbers, so run, don’t walk, towards that nearest calculator. 

Before breaking out the dictionary for confusing terms like negative equity and flip-flop debentures (I made that one up. See? Confusing) take things slow and easy. Let’s look at the absolutes.

How much do you owe on your car? Reach out to your lender to find out what your payoff amount is. This may be different from your last statement balance. So, for the sake of keeping numbers precise, find out what the amount is at the exact time you start the selling process.

Obviously, if you are nearing your next payment and plan to fulfill it, subtract that number from the overall payoff amount. As stated, you want the numbers as precise as possible before moving on to the next step.

Side Note: do not be ashamed or put off asking your car loan company about how you can sell the vehicle. They can be a great resource for steps going forward. This also goes for your local DMV branch. Use your resources!

How Much Money Is Your Car Worth?

Hold your breath. It’s time to see where you stand.

Use resources like Kelley Blue Book and Sell My Car Colorado to check the overall value of your vehicle. You can even keep a close eye on your car’s model on private selling sites like Facebook and Craigslist. Basically, you want an estimate on what your car is selling for.

Remember that there are multiple values for your car, depending on the path of sale. Your private party, retail and trade-in values may all be drastically different. While you may have figured you’d trade-in your car to speed up the process, you may benefit more by going through the private selling process.

Furthermore, make sure to be brutally honest about the condition of your vehicle. You’re not attempting to upsell your car with a pat on the back and a good waxing. When looking up the value, keep the state and mileage of the vehicle valid. Sources like Kelley Blue Book have condition status as an option. Use it correctly. Precise numbers!

Now, for the moment of truth. Take the estimated value of your car and subtract it from your loan payoff amount. What’s the difference?

You may come out in the negative. This is to be expected in some cases depending on the car’s market value or loan conditions. You’re getting out of your current payments. It may not be a win-win for both parties. Keep that in mind when deciding if you are truly going to sell your car when you still owe money on it.

NOW How to Sell Your Car When You Still Owe Money on It

So you’ve done the numbers and have decided that you’re going to proceed with the process. Before you drive off to the nearest dealership, give your loan company a call to discuss your options. If you want to pay off the entirety of the loan before selling, you may be able to increase your payments for a short period to speed up the process. You can also pay the remainder out of pocket. Otherwise, let them know the circumstances and how you plan to move forward.

If the value of your car will not cover the rest of your loan (negative equity) then there are a plethora of ways to go about it.

Roll the Equity

Trading in your car for a new vehicle is the most efficient way to go about it. The car dealership will handle most of the work for you. In this case, you will roll over the remainder of your loan onto the next vehicle, deducting the value they give you for the trade-in.

Just to note, trade-in values for vehicles are usually significantly less than selling your car online or to a private buyer. If you’re trying to get the best bang for your buck, then you may want to put in the extra effort of selling it another way. If payments aren’t the problem, but the car itself is, then trading it in and rolling equity is the easiest way to go about selling.

Sell Privately

If you are looking to get as much money off your vehicle as possible, helping clear your debt or reduce it, then selling privately is your best bet. The only roadblock is that of work.

Firstly, you do not officially own the title to the vehicle; the loan company does. That’s where the extra work comes in. It’s possible to contact the loan company and have them facilitate the private selling process. If the loan is through a bank or private funder, you can often do the sale at their location, helping make the process easier.

It’s possible to transfer the loan and/or title to the private party, but this involves communication on both ends. Make sure to let the buyer know the circumstances. It’s not as easy as handing over cash and keys. Keep them aware of how the title or loan transfer is going to go. This is why having help from the lender is extremely useful.

Noticing a trend here? Call your lender.

The extra effort in private-party selling also revolves around, well, selling. Dealing with private parties is a hassle. It involves posting pictures and advertisements online, dealing with questions and setting up times for test drives. Selling your car on the internet to companies like Sell My Car Colorado can speed up the process tremendously.

Think it Through

While selling your car when you still owe money on it is possible, it’s a lot of wading through paperwork and calculating numbers. Give it some thought and research before making your final decision. Waiting for the right time to sell your car or waiting for the payoff amount to be lower may be a better plan. If it’s only a matter of payment prices, talk to your lender. It may be possible to agree on a different payment plan.

Albeit, if you want to sell your car, it is possible. Trading it in can be the most efficient way, but less profitable. Selling it privately can be more work. Regardless, it’s not going to be as easy as selling a vehicle that’s paid off, but that’s okay. Just make sure the ends justify the means.

If you’re looking for further questions or a website to sell your car (or any vehicle, for that matter), contact Sell My Car Colorado. We have expert brokers with years of experience in the industry.