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It’s not impossible to sell a car that’s still under finance, but it can be tricker than selling a car you’ve fully paid off. Generally, you still have to pay off the loan before you transfer ownership to someone else. But there are a few ways to speed up that process, or pay it off after.
You have two main options when it comes to selling your car with a loan:
With both options, you’re still responsible for paying off the loan. With a private party, you can either pay off the loan first or use the profits to pay off your lender. With a dealership, you can switch in your car for a vehicle of similar value and roll your old loan into a new deal.
Thinking of selling your car to a private party.
This is the easiest option when money’s tight, but you need to earn the trust of your buyer.
This option might not be the best choice if your car loan is upside down, or when your car’s value is worth more than its resale value.
You may be able to save some money by a href=”https://www.finder.com/uk/car-loans”>switching to a lender with more-competitive rates and paying off your car loan. Then you can sell your car to someone else.
Paying off the car loan with your own savings eliminates debt altogether. Finding a low interest credit card, a small loan or debt consolidation can be beneficial if the rates are lower and you know you can keep up with payments.
When you’re ready to sell your car, you have other options if you still owe money on it. Many dealers are happy to work with you to make a fresh sale and you may even be able to get more-reasonable rates.
If you want to upgrade your car, many dealers will incorporate the terms of the loan into a trade-in deal. Especially if it’s the same dealer you used for your first car. You might end up with a larger car loan.
If your car is less than five years old and in good condition, you could get a reasonable trade-in offer at a dealership. You can use that cash to buy a new car elsewhere or spend it as you like.
You can also downgrade your car if you’re looking for something more cost-effective and want more money in your pocket after the trade. This might be a better option if you owe more than your car is worth.
Selling a car that’s worth more than your loan balance is generally easier than selling a car valued less than your balance. With an underwater car loan, you’ll still be responsible for covering the difference between your loan balance and the car’s value when you sell it to a private party or dealership. To get the most out of your sale, consider investing in some improvements, or at the very least make sure it’s spotless.
Warning: late repayments can cause you serious money problems. See our debt help guides.
Discussing your options with your lender before selling the car can help you understand the conditions of your loan and your options. It may even be willing to readjust the terms of your current loan to help you pay it off faster.
You can learn about how car financing works by visiting our full guide to car loans.
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