How to sell a financed car to a private buyer in 2022

Blog Home

Updated on by

Selling a car with a loan is hard because you don't have a clear title that can be signed over to the new owner. Therefore, your buyer can't register the car in their name until your loan is paid off. This used to mean you either had to pay off your loan before listing your car for sale or trade your car into a dealer for a lower price.

KeySavvy offers a new way to sell your financed car without paying it off first, but there are other ways to sell your car when you still owe money on it. This article describes them all so you can make the best choice for your situation.

Help Me Choose

Answer the questions below and we'll recommend the best way to sell your car.

Which is most important to you?

Your answers are not saved or shared with anyone.

How to Sell a Car With a Loan

Pay Off Your Loan First

If you have the cash to pay off your loan and the time to wait for your bank to send you the title, this is still an easy option.

Some articles suggest taking out a personal loan to pay off your auto loan. This is not good financial advice. An unsecured personal loan (i.e. there is no collateral, such as a car, for the lender to repossess if you miss your payments) is higher risk for banks. This risk is passed on to you, the borrower, as a higher interest rate. Taking out a personal loan will reduce your credit score which could make buying your next car, getting a new apartment, or buying a home, more challenging. Your credit score would be impacted even if you paid the loan off right away after selling your car.

Pros
  • You can show buyers your title and give them confidence to buy. The sale will be simpler and require less paperwork.
Cons
  • You have to pay your entire loan balance upfront, which could be thousands of dollars.
  • You have to wait for your bank to send you the title or lien release, which can take several weeks or even months.
Trade Your Vehicle in to a Dealer

This is the best option if you want to sell as fast as possible and less concerned about getting the most money for your car.

Pros
  • It's quick and easy. The dealership will pay off your loan.
Cons
Use KeySavvy to Sell to a Private Buyer

This is the best option if you want to maximize your selling price and don't want to pay your loan off first. It's also one of the fastest ways to sell your car if you have a loan, since you don't have to wait for your title.

Click here to learn more about how to sell your financed car with KeySavvy.

Pros
  • You don't have to pay off your loan in advance. The loan balance is deducted from your payout.
  • You don't have to wait for your title or lien release to arrive from your bank. Your buyer can pick up the car as soon as you agree to sell it.
  • KeySavvy handles the loan payoff and title transfer paperwork for you.
  • You can sell your car to a private buyer on any marketplace you prefer, maximizing your price.
Cons
  • It takes longer to sell to a private buyer compared to selling your car to a dealer.
  • KeySavvy charges a fee of $99 to handle the necessary paperwork and work with your lender.
Work With Your Lender to Sell to a Private Buyer

This is an option if your lender is a small, local bank or credit union. Before listing your car for sale, call your lender to see if they can support a private party sale.

Pros
  • You can sell your car to a private buyer, maximizing your price
  • You don't have to pay off your loan in advance. Your buyer will pay your lender directly at the local branch.
Cons
  • Usually only smaller, local lenders offer this service.
  • Your buyer may not receive the title right away and may be uncomfortable with the process.
  • It takes longer to sell to a private buyer compared to selling your car to a dealer.

Final Thoughts

Selling a car with a loan is certainly possible and there are more choices now than ever before. If you're listing your car for sale, be sure to disclose that you have a loan and what process you plan on following. Being upfront will avoid surprises that could deter buyers from going through with a purchase. If you're not sure where to list your car for sale, check out our article where we listed the same car on seven different marketplaces.

author headshot

About Andrew Crowell

Andrew is an avid car enthusiast, software engineer, and business leader in the automotive and e-commerce industry. He's owned a couple Mazda Miatas, an E46 M3, a Subaru WRX STI, and a Porsche 911 Turbo.

Buy and sell cars worry-free

KeySavvy makes it safer and easier to buy and sell cars on any marketplace.

Learn More

Follow Us
Better Business Bureau Accredited

Copyright © 2022 KeySavvy, Inc., a public benefit corporation.

KeySavvy is a licensed auto dealer, regulated by Minnesota Driver & Vehicle Services. License #DLR100357.