How to Sell a Car with a Loan

Financing is a perfectly reasonable way to purchase a car if you don’t have the money upfront. In fact, most people will finance a car at one point in their lives.

Unless you happen to be flush with cash or you are on a small budget, chances are you will utilize credit to buy your next car. After making a small percentage of the sale price as a down payment, the remainder of the purchase price will be covered by a financial institution.

But let’s say halfway into your loan, you decide you want to sell the car for something else. Is this possible? Maybe, but it will depend on your car lien.

Nonetheless, we know how to sell a car with a loan.

How do Car Liens Work?

When you finance the purchase of a car, the lending company will place what’s called a lien on the car. In a nutshell, this means that the lender has legal claim to the vehicle, meaning it can’t be sold or transferred to another party before the loan is paid off.

Of course, the auto lender wants to make sure it gets back the money it lent you to buy the car, and having a lien on the car protects them in the event you can’t pay them back. It also generally restricts you from doing much of anything besides driving the car. If your loan becomes delinquent from non-payment, your credit score will suffer and the car may be repossessed.

Even if you can’t sell a car with a loan in a private transaction, don’t fear.

What Options Are There?

If you’re really sure you want to sell your car before paying it off, then let’s get into it.


The simplest way to sell a car with a lien is to trade it in at a dealership. Whether you bought your car at a dealership or not, you can still take advantage of a dealer financing to get cash for your car.

Just about every car dealership has a credit department, where they can process loans for car buyers. In addition, they can consolidate and roll-over car liens into new car purchases with a trade-in. So if you want to sell your current car to get a new one, this will be your easiest option.

When you present the dealer with your vehicle to trade in, they will make you an offer to pay you for the car. Now remember, it’s likely the dealership will offer you less than the car is worth. That’s because they are in business to make money, and acquiring used car inventory at lower prices is the name of the game. While this may not be optimal, it is the most straightforward way to work directly with professionals to sell a car that you still owe money on.

Once you accept their trade-in offer, they will take your car and put the proceeds towards your car loan. While hopefully the proceeds cover the remainder of the loan, it’s possible their offer might not cover the entire lien.

If you have something called negative equity in your car, then that means you owe more on the car loan than the car itself is worth. This means when you complete your trade-in, there will still be a balance on your loan. Don’t worry – the dealership will be able to roll this balance over into a new loan for a new car you want to buy.

Use a Loan to Cover the Balance

If you’re not in the market for a new car, then trading in your current car isn’t a practical option. Maybe you have an extra car you want to sell or your family is downsizing to one car.

The other option to sell a car with a lien is to simply pay off the loan. Of course, this is easier said than done if you aren’t made of money. But let’s say a few years ago you bought a $25,000 car on credit and put $5,000 down. Today, your remaining balance is only $7,500 and the car is still worth $10,000.

Assuming you have no money in the bank, let’s say you get a personal loan for $7,500 to cover the balance of your car loan. Once your car loan is paid off, you’ll be able to freely sell your car for the $10,000 it is worth. So now you have $10,000 in proceeds from the sale and a $7,500 balance on your personal loan.

From here, you can just put some of your proceeds from selling your car towards the personal loan and pay it off completely. Assuming this process is completed in a short span of time, the interest paid on your personal loan won’t exceed what you got for the car. This way, you’ll come ahead with some extra cash in your pocket.

Things to Remember

Since we are not privy to everyone’s financial situation, take these options with a grain of salt. Always consult with a financial advisor if you are serious you want to sell a financed car, but you’re unsure how to take the next steps. We can not guarantee these outcomes will work for everyone.

But rest assured, these options are tried and true and provide you ways to sell your car if you still owe money on it. So figure out how much your car is worth by getting a cash appraisal from us or stop by your local dealership to get a trade-in offer.

Give us a call at 844-OFFER-44 and we’ll give you a cash offer for your car, even if you still owe money on it. Then follow our steps above to take care of your loan balance so you can sell your car with ease.