If you have a car loan you can eliminate from your current debt, do so to decrease your monthly expenses. Unless you have a zero-percent loan, you are paying unnecessary money toward interest. Because your loan amount is more than your vehicle's sale value, you must come up with extra cash to satisfy your loan amount. Consider the process of selling your upside-car to determine if it can benefit you.
Satisfying Your Loan
If you're upside-down in your car, you must pay to satisfy the loan balance after you receive your sales price to release the vehicle's lien. Most states do not allow transfer of vehicle ownership while a loan exists, so paying off the loan is necessary, not optional. In states that do allow title transfers while a lien exists, most buyers are knowledgeable enough to avoid a title with a lien holder. If someone takes ownership of your car and you don't pay the loan, the bank can repossess the vehicle from the new owner.
Determining Sales Value
Because of the wealth of information available online, many buyers use online sources to make sure prices are fair. Use Internet appraisal guides to determine a reasonable sale price. Go to NADAGuides.com, the Kelley Blue Book website and Edmunds.com to assess your vehicle's private-sale value. Keep your selling price relevant to the appraisal value to interest buyers. It is highly unlikely you'll receive phone calls from potential buyers if you are requesting a higher price than other sellers.
Loan Payoff
Call your bank to determine your loan's payoff amount. Deduct your value from the payoff amount to so you know how much money you must come up with on your own to satisfy the loan after the sale. Contact your bank to find out its lien-release process. If you sell your vehicle and the lender is local, you can arrange to go to the bank with the buyer and satisfy the loan, allowing you to receive the lien release to give to the new owner.
Another Option
If you're unable to come up with the extra money you need to satisfy your loan, consider leasing a car. You can roll money over to a vehicle lease, although you must follow the mileage and term requirements that a lease entails. At the end of your lease term, you can simply walk away from the car and payment without concern for vehicle value. If you currently have a high interest rate or a lot of time left on the loan, this option can prove beneficial. Talk to a dealer to find out if the option is worthwhile.
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