How to Sell a Car With an Outstanding Loan

Selling a car with an outstanding loan could be easy--if you paid a lot down on the car and it is worth more than the balance on the loan. Unfortunately, many people find themselves in the exact opposite situation, according to the MSN Money website. Cars quickly decline in value, causing many car owners to become "upside down" on their loan soon after they make the purchase. That can make a resale challenging because the loan must be paid off to complete the transaction.

Instructions

1

Determine the estimated value of the car. Seek a valuation from a credible automotive vehicle valuation company such as Kelly Blue Book. Visit the website and enter year, make, model and other information about your car to receive a free valuation.

2

Check your billing statement to determine the balance on the loan, or call the lender's customer service department.

3

Check with your lender for specific instructions on coordinating a sale of the car to a private buyer--if that is what you choose to do. The bank will not release its legal claim to the car--called a lien--until the loan balance is paid. Also, check with your state's Department of Motor Vehicles to get the required paperwork for transferring automobile ownership in your state.

4

Sell the car to a private buyer. Advertise it through your social network and by listing it on free online classified sites. Or advertise the car in your local newspaper. Use the estimated value of the car to establish your asking price. MSN Money reports that you'll probably get more money for the car by selling it yourself than if you trade it in at a dealership. Instruct the buyer to meet you at the bank with cash or a certified check made out to you and the bank. Add your own personal money to the transaction if the sales price is less than the balance on the loan. Complete paperwork at the bank to pay off the loan and release the lien. Then complete the paperwork from the Department of Motor Vehicles to complete the transaction.

5

Sell the car to a dealer if you would rather not sell it yourself. Or trade it in for another car. MSN Money reports these transactions are easy because the dealer handles all the paperwork. However, according to MSN Money, the dealer may overcharge you for the new car and offer you a loan with a high interest rate.