How To Sell Your Car With An Ongoing Auto Loan?
The majority of Americans prefer to finance their car. While getting financing isn’t a laborious task if you meet the requirements, selling a financed car can get a bit difficult. This is mostly because of the extra steps needed to get everything in order.
Read on to learn how to sell your car when you still have a loan.
Gather All the Required Information
The first and most important step is to accumulate all the information regarding your car and the loan. Here’s what you must do:
- Contact your lender to find out the payoff amount along with the process
- With the help of a pricing guide, determine the value and trade-in value of your vehicle
- Deduct the payoff amount from the current value
- If you get a positive amount, your car still has some equity
- If the result is negative, you’re upside down on the loan. This means you’ll be giving all the money from the sale to the lender
If you’ve borrowed the loan from any local bank, you must visit the bank office with the lender to get the paperwork done. With any online lender, you’ll be directed to any nearby bank partner or financial firm to complete the transaction.
Selling Your Car When You Have A Positive Equity
When the value of your vehicle is more than the amount due on the loan, you have positive equity. This implies that you’re to benefit if you sell the car. You can utilize the sale’s cash amount to pay the loan off and pocket any extra money left over. When you hold positive equity for your car, the process of selling becomes easier.
Get in touch with your lender and discuss the selling process since it might differ from one lender to the other. Figure out the payoff amount, value of the vehicle, the steps for transferring the title, and so forth. Moreover, you can then sell the vehicle privately or to any dealer. When the buyer is ready, the sale can be carried out in three possible ways.
The buyer pays the entire amount of the vehicle to the lender and the lender will return any excess amount to you through checks. The buyer can also write a check for the car’s value, after which you can pay the balance amount.
Selling Your Car When You Have A Negative Equity
Having negative equity means you’re likely to end up paying more than the actual car value. It’s also known as ‘underwater’ or ‘upside-down’ on auto loans. To sell a vehicle with negative equity, you might have to face certain challenges.
Figure out how much negative equity you’re carrying. If the amount is minimal, you can surely end the process by paying from your savings. However, if the amount is higher, you might have to look for other financing options. Contact your lender if you’ve negative equity and talk about every aspect of refinancing your auto loan. In such cases, it’s crucial you prepare your vehicle for resale. This includes fixing any scratches, dents, and so on to make it more attractive.
When selling the vehicle, make sure you finalize a price that’s fair enough. When the equity is negative, looking for a private sale is highly recommended. To avoid any frauds, thoroughly discuss the sale, its condition, price, and so forth. You can also consider talking to a dealer about purchasing your car.
Trade-In The Car When You Owe Money On The Loan
Trade-in is an option where all paperwork is handled by the dealer. When the trade-in of the vehicle with positive equity is carried out, the dealer can provide credit for the difference in the amount. This can be used to purchase your next car. While looking for a new auto financing, make sure to work on your credit score, get pre-approved options, and search for the best deal possible.
On the other hand, if you’re opting for a trade-in with negative equity, the dealer offers a new financing option. This option entails that the amount owed is added to the new loan. When working with negative equity, be very careful since you’re investing in a larger debt. Another option to consider is refinancing your current auto loan instead of looking for another vehicle at a lower rate of interest.
Sell It Directly to An Interested Buyer
Recognizing the right buyer for your vehicle is an essential step for making the selling process easier. Some buyers can be unenthusiastic and doubtful about the purchase. Therefore, look for a buyer that wouldn’t hesitate and is interested in making the purchase despite a possible complicated process.
Moreover, get in touch with any renowned financial institution or bank. This will add to the confidence level of the buyer.
Overall, closing a car deal directly with an interested buyer will make the transaction safer and quicker.
Bottom Line
Don’t feel overwhelmed when you’re looking to sell your vehicle with an active auto loan. To streamline the process, carry out all the necessary research and prepare any documentation. Finally, work on all possible options for reducing the loan amount before reselling.
