Used car prices have fluctuated significantly over the past several years. Cars usually depreciate every year, however in the past few years some makes and models have stayed relatively flat or may have even appreciated in value slightly.
This is unusual and may mean now could be a good time to sell your vehicle, especially when compared to prices a few years ago. So can you sell a car with a title loan? The answer is yes, let’s find out how.
Selling a Car with a Title Loan
What if you have a title loan on your vehicle and want to sell it to generate funds? Maybe you no longer need the vehicle. On the other hand, perhaps you want to trade in the vehicle and buy a new one, but still have a balance on your title loan.
Both selling the car and trading it in are possible. What is the first step to moving forward with either of these options?
Get a Title Loan Payoff Quote
When you get a title loan the lender places a lien on the vehicle. This means the lien will need to be satisfied to sell the car. Therefore, the first step when considering selling a vehicle with a title loan is to contact your lender and get a payoff quote. The vehicle value should be significantly more than your payoff quote if you plan on selling your vehicle.
If for some reason the amount you owe on your title loan is more than your car is worth then it will be challenging to move forward with selling the vehicle.
Let’s assume the vehicle value is more than the title loan balance. There are two ways to sell the car:
- Close the loan before the sale
- Sell the vehicle with the lien
Closing the Title Loan Before Sale
The easiest and cleanest way to sell a car with a title loan is to close the title loan prior to the sale. This will allow you to get your title back with the lien released. Having a lien free title makes selling a car easier. This option does require coming up with the funds to repay the title loan in full. If this is not an option, go to the next section – Selling the car with the lien.
Trading in a car, as we’ll talk about shortly, is more commonly done with vehicle that have existing liens making this part less important. It is the private party sale where having the lien free title matters most.
Find out what it would take to fully pay off your title loan, and if you plan on selling your car to a private party consider doing everything you can to pay off the loan prior to selling the car. Learn how to pay off your title loan fast.
Selling the Car with the Lien
The process of selling a car with a title loan depends on the type of sale. There are generally three types of sales:
- Selling the vehicle to a private party
- Selling the vehicle to a dealer
- Trading in the vehicle to a dealer
Selling the Car with a Title Loan to a Private Party
Selling a car with an existing title loan to a private party can be done, but can also be a bit challenging. A buyer will want a free and clear title, and to get a free and clear title you will need to pay off your title loan in full and sign your title over to the buyer.
If the buyer is willing to go through the process of repaying the title loan while purchasing your car then this can be done. Contact your lender for assistance if needed.
In some cases you can meet the buyer at the title loan company location and give them the title as soon as the loan is paid off. If this is not an option you may need to write up a purchase agreement that spells out the terms of the sale.
When selling the car to someone you know, like a family member or friend, they may be more willing to deal with paying off the title loan. You will still want to have a purchase agreement to make sure everything is communicated clearly.
Selling the Car with a Title Loan to a Dealer
When selling a car to a dealer the dealer will contact the lien holder, in this case the title loan company, for a payoff quote. They will need the title to sell your car to a wholesaler so they will pay off the title loan.
Car dealers do this on a regular basis so it is not unusual for them to purchase vehicles with liens. The balance of the loan will get deducted form the trade-in purchase price and applied to the new car purchase contract.
Trading the Vehicle In with the Title Loan
If you plan on purchasing a new car from a dealer than you will need to trade in the car with the title loan. It is easier to trade in a vehicle with a title loan than to sell the vehicle to a private party.
The reason is that car dealers purchased trade-ins with existing loan balances all the time. It is part of their regular business and they have the people, processes, and tools to handle these types of situations with ease.
When you trade in the car the dealer will ask if there is a lien. If you have a title loan the answer is yes. The dealer will contact the lienholder and make arrangements to pay off the loan.
Summary
Can you sell your car if you have a title loan. Yes, having a title loan does not mean you cannot sell or trade in a vehicle. The vehicle is still yours, you just owe money to the title lender.
The lender has a lien to make sure this balance is paid when the vehicle is sold. In order to sell the vehicle and transfer the title, the lien will need to be released. Contact your lender to find out what steps are needed to do so.