How to Get Rid of a Car You're Making Payments On

Getting rid of a car you are making payments on can be tricky if you are "upside down" on the payments. Being upside down means you owe more than it is worth. If you want to save your credit score, you will have to pay the difference to the finance company. If your credit is already shot and you have not tried to repair it at the time you need to get rid of the car, you have more options.

Instructions

Getting What is Owed

1

Put the car up for sale. If you owe less than what the car is worth, when you sell the car, contact the finance company to find out what the payoff amount is. If you don't sell the car before the next payment is due, make that payment and call to get a new payoff amount.

2

Pay the finance company the payoff amount. Anything over the payoff amount is yours to keep. Complete all of the required paperwork to transfer the title to the new owner. Pay the finance company. Give a copy of your receipt of payment of the payoff amount to the new owner. It will take a few days (or more) for the finance company to clear the lien on the title.

3

Tell the finance company that the title is now in the buyer's name. It should be able to find the title easily enough via the title number, but it always helps to have the name of the new owner. The finance company will remove the lien from the title.

If You Can't Get What is Owed

4

Contact the finance company and let it know that you cannot afford to keep the vehicle. Officials there will tell you where to turn the vehicle in.

5

Do not make any more payments once you have notified the finance company. It will start the repossession process.

6

Leave the vehicle where the finance company has access to it. The finance company will instruct you on returning the keys. It may have you drop the keys and the car off at a certain place, or it may have you leave the car with the keys in a known location so someone can pick it up.

Have Someone Take Over Payments

7

Advertise the car for sale. For the price in the ad, put in the amount due to the finance company.

8

Write your ad so that it is clear that the buyer will be assuming payments. Contact the finance company to let it know you will be attempting to sell the vehicle and that the new buyer will assume the payments. The finance company will instruct you on its procedures to transfer the loan and the title.

9

Draft a contract between the buyer and yourself stating that the buyer will be taking over payments, who the finance company is, the finance company's contact information and when the payment is due. (This is the minimum that should be included in the purchase contract---if you prefer a more detailed contract, you should contact an attorney to help you draft a contract.)

10

Double-check with the finance company and the Department of Motor Vehicles to be sure the loan was transferred and that the title was properly transferred so that you do not have any liability should the new owner default on the payments.