How To Sell a Car When You Still Owe Money on a Loan

by Contributor

If you want to sell our car yourself, but you still owe money on it, you will need to do some research and you will need to spend some money. Your research will center around determining what the care is worth -- this can be done online. Your money will go to making it as presentable as possible to potential buyers. Aside from that, structuring a car deal in which you need to pay off a lender differs in only a few respects from selling a car under any other circumstances.


Determine how much you owe on your car. Call the lender and get the payoff. Interest on auto loans accrues daily, so ask for a 30-day payoff. If the lender won't give a 30-day payoff, make sure you get the per diem on the loan. Per diem is the amount of interest that accrues daily. Once you have the per diem you can figure your own 30-day payoff. Multiply the per diem by 30 and add it to the payoff. For example, if the payoff is $10,000 and the per diem is $3, then the 30-day payoff would be $10,090. That is the amount of money the lender will need to release the title to the vehicle.


Next, determine what the car is actually worth. There are several sites you can consult to help with this. Find some links in the References section. You want the retail value. Once you have this information, determine your asking price. Don't ask too little for your car because potential buyers won't want to pay your asking price, so you may as well start high and leave yourself room to negotiate. If your vehicle is worth more than the payoff, that's great. For example, you can sell your car for $15,000 and the payoff is $12,000. Send $12,000 of the money to the bank to get the title and put the other $3,000 in your pocket! Many times though, the payoff is higher than what you can get for your vehicle. This is referred to as negative equity or being "upside down." You can still sell the car, but you will have to have the money available to send the bank to release the title. If you don't have enough money, you can get a signature loan or cash advance on your credit card to make up the difference. For example, your payoff is $15,000, but you can only sell your car for $10,000. You will have to come up with an additional $5,000 to send to the bank to release the title. You cannot sell the car without getting a clear title!


Now it's time to merchandise and advertise your car. Spend about $100 at a good detail shop and have the vehicle thoroughly detailed. Remove all your personal belongings from the car and make it looks, smells and feels as good as possible. You don't want to have to apologize to potential buyers for the vehicle's appearance. Next, write a good classified ad for your local paper. Mention the options the car has like leather, moon roof, alloy wheels, etc. Include an element to add mystery and urgency to the add. "Motivated seller, price reduced!" works well. You may not want to put the price in the paper because that will give people a reason to call. Run a Carfax on your car, print it out and put it in the glove box. Potential buyers want to know they're not buying a salvaged or branded title vehicle. Make sure you put a for sale sign in the car and park in busy parts of shopping centers, etc., when you are out and about.


If your ad is effective and your for sale sign visible, you will get calls from people who want to see your car. When meeting with potential buyers, tell them all the great things you like about the car. Show them your Carfax report and your maintenance records. Try and build the value in the vehicle. Remind them that since you are a private seller they will save money on sales tax and dealer fees. If the buyer makes an offer less than your asking price (and they probably will), make a counter-offer. Once you and the buyer have agreed on a price get the money in cash or a cashier's check. You do not want to have a buyer take drive off in the car only to have their personal check bounce! Once you've been paid for the car get the title as soon as possible. Send your payoff in the form of a cashier's check via overnight mail. As soon as you receive the title, call the buyer and give it to them without delay.


  • check Spend the money on detailing your car, a good classified ad and overnighting funds to your lender


  • close Get the money in cash or a cashier's check.
  • close Don't let someone "assume payments" on your loan.
  • close Get the title to the owner as soon as possible.

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