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If you’re thinking about selling your car but you still have a car title loan outstanding for that vehicle, you might be wondering if you can sell a car with a title loan on it. The answer is yes, but the process can be a bit more difficult compared to selling a car that is paid-off already.
Can You Sell a Car with a Title Loan on It
It’s not a simple process, but you can sell a car with a title loan still on it. Whether you plan on using the money from the sale to pay off the loan, or you plan on finishing the pay off while it’s up for sale, you will have to let interested buyers know that you currently still have an outstanding title loan. Compared to selling a vehicle that you own outright, selling a car with a title loan on it is a bit more involved since there is a lien is placed on your car title when the loan is made. What this means is that the car’s title technically belongs to the lender you have the car title loan with. Until the loan is paid off, the lien will not be released, and the car will not be fully yours.
How to Sell Your Car When You Have a Car Title Loan
When looking to sell your car while your auto title loan is open, there are a few options you can consider.
Pay off the loan, then sell
It may be easier to sell a car that has a title loan by paying off the car title loan first. This will make the process of selling your car a lot easier because there are no concerns that may scare the buyer. Once you’ve paid off the title loan, you’ll be able to sell your car without any concerns about who owns the title. You will own it again, so you’ll be able to transfer it to a buyer. After the loan is paid, you can list the car for sale, and hopefully make a profit.
Private sale with payoff
If you find a buyer and have agreed to a sale price that’s acceptable to both you and them, the payoff with the lender needs to be coordinated. This part of the process can be a bit tricky, as it can require a certain level of trust between the buyer and the seller as far as the payoff is concerned. The buyer could either give you the money up-front, trusting that you will use the funds to pay off the loan, or – if the lender or loan servicer allows – pay off the title loan on your behalf. In either scenario, the seller would be obligated to ensure the vehicle title is transferred over to the buyer when the sale is completed.
Trade-in the vehicle
If you are looking to sell your car because you’re planning on upgrading to a newer vehicle or different make, the dealer where you purchase your next vehicle may be willing to take the car with title loan on it as a trade-in. As part of the trade-in, the dealer will directly pay off your auto title loan, and apply the agreed-upon trade-in value to the purchase of car you’re buying.
Sell the car to a dealership
Some dealerships purchase vehicles with outstanding loans, even when you’re not buying a new or used car from them. If you find a car dealer that’s willing to purchase your vehicle at an acceptable price to you, the dealer will take care of paying off your title loan directly with the lender, and deduct the loan payoff from the agreed-upon purchase price.
Transferring the Car Title with a Car Title Loan
Unfortunately, you will not be able to officially transfer the title of the car to the name of the new owner until the car title loan is paid off, and the lender’s lien is released. When you submit a title change through the state, they will be notified of any liens or holds on the car, so they can stop any transfers that may happen.
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If you plan on using the money you receive for the car to pay off your car title loan, you’ll have to discuss that with your buyer. If it’s a friend or family member, they may be more open to waiting for their title transfer if they know you have to pay off the loan. Other people who see your car advertised may not be as flexible. Many people want to be able to pay for the car and instantly have the title signed over to their name. As mentioned above, if you have a car title loan on the car and need to pay it off with the money they give you, you should let them know before the sale.
How Do Car Title Loans Work?
Car title loans use the title of your vehicle as collateral for the money you are loaned. The market value of the car and your verifiable income are the key factors to determine loan approval.1 Once you’ve received your loan proceeds, the lender will place a lien on your vehicle’s title.
There’s no need to worry, though, because you’re still able to drive your car like you normally would as long as you make your scheduled monthly payments on time. It’s just the title that is in the possession of the lender while your loan is active.
Applying for a Title Loan Instead of Selling Your Vehicle
If you’re trying to sell your car because you can no longer afford your car title loan with another lender, consider refinancing with a title loan serviced by LoanMart, to see if you can qualify for a lower monthly payment or interest rate.1 Title loans serviced by LoanMart offer some of the most competitive interest rates in the title loan industry.
You can apply with LoanMart in one of two ways:
- Apply with our online application through your phone, tablet, or computer.
- Call us at our toll-free number and complete the application over the phone with a representative.
During the application, let us know if your car has a title loan on it.
Once you’ve submitted your initial application, a LoanMart representative will contact you about submitting any required documentation. After you’ve submitted your documents, you’ll receive your final monthly payment quote and be able to sign your new contract1. If your vehicle has a title loan on it, the loan will be paid off directly.
With title loans serviced by LoanMart, you’ll have access to great service with a customer service team that cares! You can even download our app and make payments from your phone! Call LoanMart today to see if you can qualify for a car title loan, or start your application now!
