How to Sell Your Car When You Still Have Payments Left

Abigail Bassett

Digital media content producer/consultant & former CNN senior producer, now running CN'TRL : Cars, Tech, Real Estate & Luxury.

We’ve all experienced it. That itchy feeling you get whenever you see the car you really want driving down the street. It starts as a little tingle in the back of your mind and suddenly it becomes a full-blown want as the object of your desire rolls by. When you turn to look at your current jalopy parked in the driveway, perhaps with a few payments left on the docket, an overwhelming sense of disappointment wells up and forces you to look away.

But fear not, oh-you-owner-of-a-car-with-payments-still-remaining, there’s an answer to your woes.You can easily get rid of your gently used car with a few payments left on it without having to mortgage your apartment or sell off members of your family. While it’s a bit more complex when you still owe money on it, it’s far easier than dealing with the daily want-demon rearing its ugly head.

First, find out how much your car is worth.

Head over to Edmunds.com or Kelley Blue Book and pull up the going rate for your year, make, and model. Be honest about the condition your car is in, too, as this will greatly affect the price you could get on the private market.

Next, ring your lender.

They’ll be able to tell you how much you have left to pay in order to own your car outright. Don’t be alarmed if the payment they quote you on the phone is slightly different from what your last balance says it is. That occurs because interest accrues daily—so likely your bill be just a hair higher than the last one that came in the mail. Compare your payoff amount with the amount that KBB and Edmunds estimate your car to be worth. If your payoff amount is less than what your car is estimated to be worth, you wont have to write a check at the end of the sale. If it’s the other way around, however, you will likely have to send money to your loan holder to get the vehicle loan cleared.

Find a buyer.

Once you have all your ducks in a row and you know what you owe and what you can sell your car for, get your buyer lined up. The best way to do this is to list your car on Instamotor and get a solid buyer without the hassle. Work with your lender directly to find out what their process for selling the car is—they hold the title so you’ll need to go through them to get the title transferred to the buyer. If your loan is held by a local bank or a credit union consider holding the sale at the local office. This provides a neutral ground for both parties, gives a formality to the sale, and the bank can provide documents immediately and notarize anything that might need some official signatures.

Transferring the title to your buyer.

If, like most loan offices, your bank is out of state (or your loan is held by a large corporation,) you’ll need to head over to the DMV and bring your bill of sale with you. You’ll need to get a temporary operating permit for the buyer to allow them to take possession of the car, and it will ensure that they get a clear title once your loan has been paid. Getting a title requires that the loan is paid in full, and that can cause a delay of a few days. If you want an expedited title, you’ll end up paying an additional processing fee. Be patient with your buyer as they will be taking on the brunt of the risk in a transaction like this—they will have the car, but not have the legal title while you wait for the transfer to happen. Never accept a personal check from a buyer. The likelihood that it will bounce or never clear is often high. Only accept a bank check, cashiers check or cash for payment on your car. In the case of getting a bank or cashiers check, it might behoove you to insist that you go with the buyer to the bank to get the check so that you know it is legitimate and correct.

Once the cash has exchanged hands, ensure that you get all the correct documentation from the DMV, remove and keep the plates, and cancel your insurance coverage on the car. You don’t want to be responsible for the car once it’s out of your possession.

Finally, go out and find your dream car! Check out the listings on Instamotor—you never know what you might find.