How to Sell a Car Privately When it is Financed

How to Sell a Financed Car

sell car with loan hdr 300x199 How to Sell a Car Privately When it is FinancedSome Great Tips for Selling Your Financed Car Privately

You’ve decided to sell your car or maybe you need to sell your car but you have a loan on it still. You have some options. Your state’s motor vehicle department won’t allow you to sell a vehicle and transfer the ownership of the title until the car has been paid for, so you have to get that taken care of somehow.

Can You Sell a Financed Car?

The answer is yes, you can sell a car that isn’t paid off. It’s a bit of a sticky situation because the buyer is going to need the title to the car and you can’t get that until you pay off the loan but you need the money from the buyer to pay off the loan.

This article aims to give you tips on how to sell a car privately with a lien if that is what you want to do. We hope to answer these questions:

  • How do You Sell a Financed Car?
  • Can You Sell a Financed Car Privately?
  • Can I Sell a Financed Car?

How to Sell a Financed Car – Your Options

First, let’s review all the options you have so that you know you’re making the best financial decision with your vehicle as well as some tips on selling a financed car.

Sell Your Financed Car to a Dealer or Trade / Cash for Your Car?

You can try to either sell your car to a dealer or trade it in for a new car. Yes, some used car dealers will flat out give you cash for your car. You can also trade your car in for another car and then what you owe on your current car gets rolled into the new car along with what you’re going to pay for that car. The nice thing is that the dealer does all the necessary paperwork for you. They’ll want to know the name of the lender and your account number or loan number as they will want confirmation.

These kinds of loans are risky and not all banks will offer these loans because they’re setting up a loan for more than the value of the new car – although, with banks, the best kinds of loans to give out are car loans (they like them), so it’s entirely possible to do it. I have. It just took a long time to pay it and I would not suggest doing that.

You will get more money for your car or truck if you sell it yourself rather than trade it in to a car dealer. The dealer has staff to pay and they may be required by the state to fix some things before they can resell it. They also need to be able to make some money on it.

Try to Clear Your Car Loan if You Can

If you sell your car yourself, you will have a much easier time if there is no lien and the title is clean – meaning, the car is paid off. Maybe there’s someone you can borrow the money from or some way to get the money. Look into that option. People coming to buy your car would rather not be buying a car that still needs to be paid off because that makes things a bit more complicated. There will be a little work on the buyer’s part to help you first pay it off and then buy the car. Some people might even walk away if they find out that you still owe money to the bank on the vehicle that you have up for sale.

Have Someone Take Over Making Your Payments

It might be possible to have someone you know transfer the loan to their name and take over making the payments for you. They would get the car, of course, but this might help you. Maybe they’ll even give you a little money in addition if the vehicle is in good shape. It’s an option. Ask a few friends or a family member if they would want to do this or if they know of someone who would.

Talk to Your Bank / Lender

If you need to sell your car because you’re having trouble making the payments, then talk to your bank. Let them know your situation and maybe they can help. One way might be to extend the period of your loan. This will bring down your monthly payment and maybe it’ll be enough to help you.


Maybe now isn’t the best time to sell your vehicle. Maybe you can wait another year or two until it’s paid off. It is really nice to not have a car payment. If you get another vehicle now, you will have more car loan payments going forward for years to come. A few hundred extra dollars in your pocket each month is pretty nice. With the economy not doing well, people have been hanging on to their cars longer because it makes more financial sense.

How to Privately Sell a Car that is Financed

If you still want to sell your car that is financed, here is what you need to do:

  1. Call your bank / lender. Ask them for a payoff amount. This is how much money they would need if you were to pay off the car today. If you don’t sell the car and have to make another payment, then get this payoff amount updated after that payment since it will change. The buyer is going to want to know what is owed and you’ll need to know this, too, of course.
  2. Figure out what the car is worth. Check with or and find the fair price / value for your car or truck.
  3. Detail clean your vehicle. You’ll get more for it if it’s shiny and looking its best.
  4. Sell the vehicle. Make a note that there is a lien on the vehicle but that you’re willing to make that process as easy as possible for the buyer.
  5. Have a Bill of Sale document. You’ll need this in order to make sure the sale is official. Both you and the buyer will need to sign it. The buyer will for sure want to have this to prove that they bought the vehicle from you while the paperwork is being done.
  6. Receive payment from the buyer and go pay off the loan. Try to do this in person and see if the bank will give you the lien release document right away. You might have to wait or they might have to mail it to you.
  7. Clear the title and sign the title to transfer it to the buyer. Here in Wisconsin, I know there’s a $5 window fee if you do it in person but that’s worth it because you walk out with the clean title right away. This get the deal done and the buyer will appreciate it if this whole process gets done quickly. Sign the title, record the mileage and do all you have to do to put it in the new buyer’s name. If you’re thinking about just handing the buyer a title and the lien release paperwork, that might not fly – you need to do this step and clear the title yourself since your name is on it.
  8. Mail the title to them or take it to them. Give them a call and let them know you have the clean title now and ask them how they want you to get it to them.

Done – that’s it.

Some Notes

sell a used car 300x199 How to Sell a Car Privately When it is FinancedThe buyer may want to go to the bank with you to pay off the loan and get the title. Don’t sneer when they ask for this – after all, you’re using their money… they should be able to go with you. Just set a time to both do this together. Call your bank or lender ahead of time and find out what you need to bring with you and when the best time is to stop in.

The buyer may even want to write a check for what you owe to your bank or lender and then write you a separate check for the price they’re buying the car for minus what you owe. Offer this if the buyer seems maybe a little uneasy about what needs to be done. They might like this option.

One other option is to use an escrow service. I personally wouldn’t offer it unless you haven’t had many offers on the vehicle and the buyer seems really uneasy. It’s one more cost you’ll have to pay and it adds another few steps into the process. If it helps you sell the car, then do it if you have to.


This process really isn’t that bad. It can be done and people do it all the time. I hope this article helped you find out how you sell a car that is still financed. Again, don’t be afraid to do this as these kinds of transactions are pretty common. Make sure you get the potential buyers to understand that you’ll do as much legwork yourself to get the deal done. The buyer will need to trust you. Show that you’re willing to do this work and they will feel more comfortable. Be quick about it and soon this will all be behind you.

I hope this article was informative and gave you some help. If I missed anything, then please leave a question or comment below and I’ll get back to you with an answer. Please also share this article on Facebook and other social media and tell your friends how great it is (if you think so).

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