At some point, we all make big purchases. Whether we invest in a house, pay for a vacation, or purchase a vehicle, we all choose to splurge every once in a while. Sometimes, we need a bit of extra help to afford these large purchases, so it’s common for many individuals and families to take out loans to purchase their big-ticket items.
A lot of people use loans and payment plans to buy a car. In fact, according to Statista, 85.5% of buyers financed their car purchases in the second quarter of 2020. For most people, buying a car outright either leaves them with too little savings or none at all.
Because financing is the primary method of payment for cars, it stands to reason that a customer may want to sell their vehicle before it is completely paid off. Whether this is because of a change of heart, change of finances, or a desire for an upgrade, this situation comes around fairly often. In fact, it’s normal for individuals to pay off their car over a span of 6-8 years. This is a long stretch of time during which they may decide that a different vehicle is a better fit for their needs.
This often causes confusion for our clients, and many wonder if they can sell their car without owning it outright. The short answer is yes; you can sell your car without having fully paid it off. However, there are some caveats and details that are important to know.
You Have to Close Your Loan
You will need to close your loan to sell your vehicle. This means settling your debts with your loan officer.
Just because you wish to sell your vehicle doesn’t mean that your debt on it disappears. When you agreed to the loan terms, you agreed to pay the amount owed plus interest. Your loan servicer or bank still expects that you pay them back.
Different institutions have different methods for paying off a loan. Reach out to the bank, credit union, or dealership that helped you finance your car, and they will let you know what to do.
The amount you still owe on your loan is called a payoff amount. If you decide to sell your car with outstanding loan sums, ask your loan officer for documentation of the payoff amount. This document will be important to keep for your records.
The payoff amount must be settled for the bank or lender to sign the title over to you. Remember, this institution legally owns your vehicle until you’ve paid your loan.
Paying Your Loan
As mentioned, you will have to pay off your loan in full. This means that you may be responsible for several thousand dollars, depending upon the amount still left on your loan. Usually, individuals pay this off monthly, but when you sell your vehicle, you will be responsible for paying the full amount in a lump sum.
The caveat is that you need to close your loan to get the money from the sale, but you also may need the money from the sale to pay out your loan. This puts some people in a difficult position when they do not have sufficient savings to completely pay off their loan at one time.
Many loan servicers will allow you to pay off the car simultaneously with the sale. This allows you to pay off your loan on the vehicle without using money from your own pocket. If there is money left over from the sale, you can keep the profit.
Selling A Car with An Outstanding Loan
Some individuals try to sell their car with a loan outstanding. This means that the loan will be transferred to the new owners, who will take over responsibility. This is not done very frequently and is not advised. Many dealerships and reputable sellers such as CarVIO will hesitate to purchase under these conditions.
If you are trying to sell the car yourself (we strongly advise against this), most buyers will pass you over for this. It’s simply too much of a hassle to get the title without a paid loan.
Can I Earn Back My Interest?
As you settle your debt, you may reflect on the amount of interest you paid to your lender to buy your car. Cars do not usually appreciate, meaning you likely won’t get back what you paid for it, and you almost surely won’t get back the interest you paid.
However, you can still get a good amount of money for your car. When you use CarVIO to sell your car, you can be sure you’re getting the best available offer.
I’ve Settled My Loan – Now What?
If you are using money from the sale of your car to pay off your loan, you obviously already have a buyer. In these cases, the lender will sign the title over to the new owner after you have settled your loan.
If you do not have a buyer in mind yet and you have paid off your loan, you are free to sell your vehicle. When you work with us, you get an offer within 24 hours of submitting your information, so the process can move very quickly. In most cases, the offer comes much sooner than that. Many of our customers receive instant offers.
If you accept our offer, we will walk you through the next steps and gather any further information we need from you. We are experts, so if there is any additional paperwork or tasks you need to complete, we will let you know.
When you work with CarVIO, you can sell your car instantly right from your own home. You can avoid unnecessary hassle or long, drawn-out processes and benefit from a quick and safe way to sell your vehicle. We purchase vehicles in a variety of conditions, including cars that no longer run. When you work with us, you can get up to $5,000 for your vehicle without even leaving your couch.
If you are ready to sell your vehicle quickly and easily, submit our online form today!