Can You Sell a Car With an Unpaid Loan?

A person signing a contract while other calculating numbers on a calculator
Fifth Avenue Volkswagen is in the business of selling cars. That seems obvious. However, did you know that we also buy cars from people? When someone is looking to move on from their current vehicle, they have a couple of options, trade it in or sell it outright. Did you also know that you can, in fact, sell a vehicle if there is still an outstanding loan? The steps are similar, but there are a couple of extra steps that sellers need to follow if a bank or other financial institution still holds the title. Our team thought it would be helpful to cover some basic information to help you get started.

READ MORE: How Can You Improve Your Car’s Resale Value?

What Information Do You Need?

If someone still owes the bank money on their vehicle and they want to sell it, expect to spend a little bit of time on the phone. Before accepting any offers, make sure you know exactly how much is owned on the vehicle, including interest and other fees. If you’re leasing a vehicle, you can also sell that vehicle, but you’ll need to determine the buy-out price, which should be located on your lease paperwork.

Once you have all of the financial information collected, you’ll want to make sure you have all the documentation ready for the sales process. This includes the owner’s manual, insurance information and maintenance records. Each of these things will go a long way to giving your buyer some extra peace of mind in a private sale.

In a perfect world, you will be able to sell your vehicle for more than you owe. However, if your sale price doesn’t cover the remainder of the loan, that price will need to be paid. Failing to come up with the rest of the money could prevent the title from being transferred to the new owner.

What If I Want to Trade-in My Car?

Trading in a vehicle to a dealership like ours will work much in the same way as selling it privately, as it applies to the basic process. However, by working with us and doing a trade-in, you might have more options to deal with negative equity. If you want to buy a new car but still owe money on your current vehicle, the outstanding balance can likely be rolled into the new loan. This will make for a higher monthly payment, but you will have a new vehicle.

We understand that this is a lot of information, and there could be some questions we didn’t cover. Make an appointment with Fifth Avenue Volkswagen, today, if you need to know more.