If you have a car with a title loan and you need some quick cash or maybe are just looking to upgrade, you might be wondering how to sell a car with a title loan.
This article will walk you through the key steps to legally sell your car and transfer ownership, even with a title loan or any other lien holder.
Relevant Articles to Read:
- Title Loan Loopholes – How To Get Out Of A Title Loan
- Can You Get a Title on a Car That Is Not Paid Off
- How Late Can You Be On a Title Loan Before They Take Your Car?
- What Happens If You Default on a Title Loan?
- What Is Title Pawning And How Does It Work
Table of Contents
Can You Sell a Vehicle With a Title Loan?
Yes, you can sell a car with a title loan on it. However, the process requires a few extra steps compared to selling a car you fully own.
That’s because the title lender likely put a lien on your vehicle when they issued the loan. This gives them legal claim over the car as collateral until you pay off the loan balance.
So, you must satisfy the loan before selling or transferring ownership.
Overall, paying off the title loan ahead of selling the vehicle tends to be the simplest approach. But other options exist, too, if planned properly.
Key Steps to Sell a Car With a Title Loan
Follow this general process if you need to sell a car with an outstanding title loan:
1. Confirm Payoff Amount
Contact your title loan lender to get the up-to-date payoff balance. This is the full amount needed to satisfy the loan before the lien can be removed.
Be sure to get the payoff quote in writing. It should include:
- Original loan amount
- Interest paid to date
- Principal balance
- Any fees
- Per diem interest charges
- Instructions for paying off the loan
Getting this information upfront streamlines the process later when you go to pay it off.
2. Determine the Car’s Value
Research your vehicle’s current market value using Kelley Blue Book or NADA Guides.
This gives you an idea of what to reasonably price it when selling and if there is any positive equity available.
Consider listing it both privately and getting offers from dealers to compare.
3. Choose Your Selling Method
You have three main options to sell a car with an outstanding title loan:
Pay Off First, Then Sell
Ideally, take care of the loan first using cash or financing, releasing the lien from your title. Then, sell the car to whoever you want and freely transfer ownership.
Pros:
- Simplifies the sale process
- Maximizes sale price
- Quick transfer to the buyer
Cons:
- Need funds to pay off first
- Lengthy DMV title transfer
Sell to a Third Party Who Pays Off the Loan
You can advertise the vehicle for sale as-is with the loan attached and find a buyer willing to pay it off for you at closing.
They would need to pay the lender directly. Once the payoff clears, the lien gets removed before transferring the title. It’s unusual to find a private party to do this because when they pay off the loan, the loan company is under no obligation to sign the title over to them.
Pros:
- One less thing to manage
- Receive sale funds immediately
Cons:
- It is harder to find interested buyers
- Lowers potential sale price
- Buyers must trust you’ll follow through
Trade-in to a Dealership
Trading the car into a dealership rolls everything into one transaction.
The dealer pays off your lien and applies any leftover equity to your new purchase.
Pros:
- Convenient one-stop process
- Access equity easily
Cons:
- Typically less money vs private sale
- Risk of negative equity on new loan
4. Transfer Car Title
Once the title loan payoff processes with the lender and lien releases (typically 24-48 hours), you can legally transfer ownership by signing over the title.
- Meet buyer at DMV if possible to transfer together
- Both parties fill out title, bill of sale, registration, etc.
- Pay any transfer fees
Then the new owner registers it under their name.
Key Takeaways
- It’s possible but challenging to sell a car with an outstanding title loan. Paying it off first is best.
- Research the car’s value and get the title loan payoff amount.
- Weigh options to sell privately, to a dealer, or have the buyer pay off the lien.
- Transfer title after the lien officially releases per lender.
Selling a vehicle with any type of lien takes coordination. But being prepared and outlining each step for the buyer will set clear expectations.
Frequently Asked Questions
Still have some questions? Here are answers to some commonly asked questions about selling a car with a title loan:
Can I transfer my title loan to the new owner?
No, auto title loans are not directly transferable. The new owner would need to apply and qualify for their own loan if they want to finance it that way.
What documents do I need to sell my car with a lien?
Be prepared with your vehicle title showing the lienholder, current registration, driver’s license, lien payoff letter, and bill of sale paperwork. This proves you legally own it and can sell it.
How long after paying off my loan can I sell my car?
It typically takes 24-48 hours after paying the title loan for the lien release to fully process. Then you are free to sell it whenever. Start shopping it as soon as you initiate payoff to speed things up.
Does paying off the loan early affect me?
No. Most title loan lenders have no early payoff penalties. Paying it off ASAP saves you money on interest charges and frees you up to sell the vehicle sooner.
What if I owe more than it’s worth?
If you have negative equity and owe more on the loan than the car’s value, your options narrow. You would need to come up with extra money to cover the difference in order to sell it.
What happens if I sell my car with a lien on it?
You open yourself up to legal risk if you sell a car still tied to a title loan without formally paying off the lien first. Tell the buyer upfront and involve the loan company for a smooth lien release.
Wrapping it all up
Selling a car with an outstanding title loan involves a few more steps but is manageable if you prepare. Pay off the loan first before transferring ownership when possible for the simplest process.
Be transparent with buyers on every aspect to build trust in the deal. Consult the loan company so liens are properly released, letting you sign over the legal title.
