If you still owe money on your vehicle but want to sell it, expect to pay off your loan to release the vehicle's lien. Many states require a lien release to transfer ownership. You may pay your loan balance using the sales payment; plan ahead by learning your lender's payoff and lien release procedures so you can better communicate with potential buyers.
Payoff Amount and Procedure
Before you sell your car, obtain your loan payoff amount from your lender. To release the vehicle's title or obtain a lien release (depending on your state), you must pay your full loan balance. If you haven't found a buyer yet, ask also for your loan's per diem amount, which is the cost of interest added to your loan daily. Ask a lending representative about the loan pay off process, such as where or how to submit your payoff and how long it takes to receive a title or lien release. A title might take several weeks to arrive.
Budgeting for Loan Payoff
Use Internet appraisal guides to determine the private sale value of your vehicle, such as the Kelley Blue Book website or Edmunds.com. If you can sell your car for more than you owe toward your loan, you may keep the profit from your sale. If your car is worth less than you owe, plan to pay the difference between the car's sales price and your loan payoff amount. Secure your funds and budget accordingly before you sell your car. This way, you'll be prepared to satisfy your loan quickly.
Communicating with Potential Buyers
You don't necessarily have to advertise that your vehicle has a lien when listing your car for sale. You should, however, let potential buyers know that you're using the sales profit to satisfy your loan, which isn't uncommon. Some buyers might want to purchase a car immediately, without having to wait for paperwork. Communicate with your buyer by explaining the payoff process and how long it should take before you receive the title or lien release to complete the sale.
Payoff Process
Involve your seller in the loan payoff process, if possible. Your buyer might feel uncomfortable paying thousands of dollars without a title or lien release in return. If your loan provider is local, complete the transaction together at your bank or credit union. If the lender isn't local, allow your buyer to make payment directly to the lender instead of you. Add a note to your account allowing the buyer to discuss your loan payoff with the lender. If you owe more than the vehicle is worth, pay your portion of the loan payoff before your buyer. This way, the buyer's payment satisfies the loan. The transaction might seem questionable if his payment still leaves a balance.
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