Selling a Car with a Lien
Blog/ Selling a Car with a Lien
Are you currently making monthly payments on a car you no longer want to own? Do you already have a new car in mind, but don’t know what to do about the car you’re still paying off?
If you said “yes” to either of these questions, you’re probably wondering how to proceed when it comes to selling a car with a loan. The process is a little complicated and you’ve probably never done it before.
At this point, the most important things you can do are learn more about your car loan and figure out what your options are when it comes to selling.
In this article, we’ll review how to sell your car with a loan and the easiest ways to do it.
What is a lien on a car?
When you first purchased your current vehicle, you probably went to the dealership and negotiated a price for the car you wanted. You put some money down, settled on a monthly payment, and walked right out the door with a set of car keys in your hand.
If you’re making monthly payments on a car, that means you took out a loan to help you pay for the car over time. With each monthly payment, you slowly chip away at the amount you owe and gradually become closer to owning the car outright.
While you’re technically in possession of this vehicle, you aren’t the legal owner of the car.
The moment you took out a loan, a lien was placed on a vehicle. This means that the lender owns your car and has the right to repossess the vehicle if you fail to make payments as you agreed.
This isn’t the end of the world, but it does make selling the car difficult if the loan on the car isn’t fully paid off. Without a title in your name, you don’t have the right to sell the car.
So how are you supposed to sell a car with a lien on it?
The good news is, you’re not stuck with the car until the terms of your loan expire. Even though you agreed to pay off your loan in maybe three years, this doesn’t mean you have to keep the car for all three of those years.
Starting the Process
Because you aren’t the legal owner of the car, you don’t technically own it until you pay off the loan. You can see why this is an issue when you want to sell the car before it’s fully paid off.
Your car is in your lender’s name and you don’t have a title to transfer, which is the most important part of selling a car. So what is the first step you should take before trying to actually sell the car?
Find Out The Current Balance Of The Loan
The first thing you should do is contact your lender and figure out the current balance of the loan. Once you know how much you owe, you can determine if you have enough money to pay off the loan before selling it.
If you can pay off the remainder of the loan now, the lender will release the lien and you’ll be the rightful owner of the car. The title will be in your name and you have the full authority to sell it as you please.
However, if you were able to pull that off, you probably would have already done it by now.
When you officially list your car for sale, the best thing you can do is be honest with potential buyers. You might be wondering what that means in this situation.
Tell Potential Buyers That Your Car Has A Lien On It’s
Some buyers may be reluctant to purchase your car because it’s somewhat of a sticky situation. They don’t know you personally and they’re forced to put blind trust in you that you’re legally allowed to sell the car.
Finding a Buyer & Selling the Car
In all honesty, you might find it difficult to locate a buyer willing to navigate this tricky situation with you. Put yourself in their shoes.
Why would you trust that somebody has the right to sell the car if they don’t even have the title in their own name? Will you get stuck finishing off their monthly payments? Will you find yourself in the middle of a lawsuit over their car? Will the car be repossessed soon after you buy it?
Don’t be surprised if people are unwilling to work with you because of these fears.
If you’re lucky enough and you’ve found a prospective buyer but haven’t yet paid off the loan, there is an easy way to finish the process while putting the buyer at ease. The most important thing you need to do is get the title in your name and earn the right to sell the car.
The best way to sell the car and transfer the title over to the buyer is to meet the buyer at the bank. While at the bank, the buyer can pay you for the car so you have the money to pay off your loan. After you pay off the loan and you have the title in your own name, you can then transfer the title over to your new buyer.
All in one shot, you sold your car, paid off your loan, and transferred the title of the vehicle. It’s a quick process, but it requires attention to detail and communication.
This whole process might make you a little nervous and you might fear that messing up even one step can lead you to a whole bunch of legal trouble.
We’re SellMax: We’ll Help You Sell Your Financed Car
If you’re still a little uneasy about how to sell a financed car with a lien on it, there is another option you should consider before resorting to keeping your car longer than you want. You can sell your car to a dealer that’ll pay off your loan for you.
That’s where SellMax comes into play. We are a car buying service that started off by paying cash for cars in San Diego and have since expanded throughout the nation. At SellMax, we’ll purchase your financed car, finish the monthly payments to the lender, and then pay you the remaining balance for your car. We do it every day. We buy all cars and even pay cash for junk cars too. If you’d like an instant offer on your car please request a quote for your car here.