How to Sell a Vehicle Before It Is Paid Off

You must pay off your car loan in full before you can sell your car to another person. If you can sell your vehicle for more than your loan payoff amount, you can keep the profit. If you sell the vehicle for less than you owe, expect to provide the remaining balance to your lender before you can transfer ownership. Lenders may differ slightly on the payoff process, so be sure to inquire about your lender's rules and process before selling your car.

Instructions

1

Contact your auto loan provider to obtain your loan payoff amount. Ask for a 10- or 15-day payoff quote that includes the interest added to your loan daily, known as the per-diem.

2

Ask a lending representative about the payoff process. Find out if you can complete the loan payoff and obtain your title or lien release immediately or if you have to wait for the lender to process the paperwork. If the lender will mail your lien release or title after receiving funds, ask for an accurate timeframe so you can better communicate with your buyer.

3

Advertise your vehicle for sale and meet with prospective buyers until you sell your car. You don't have to advertise that the vehicle still has a loan, but once you meet with buyers, explain the payoff process and how long it takes to provide appropriate paperwork to transfer ownership.

4

Pay your lender. If you sold your car for less than your loan's payoff amount, pay the excess balance at the same time as your buyer. Bring your buyer to your lender to complete the payment and obtain paperwork if the lender is local.

5

Provide your buyer with a properly signed title and lien release, depending on your state. Check your state's motor vehicle rules if you're unclear on the title transfer process. Some states require lien holders to sign the title and others require an original lien release to supplement a signed vehicle title.

6

Remove your license plates from the vehicle before the buyer takes your car. Cancel your car insurance policy immediately.