Can You Sell Back a Financed Car? Pros & Cons Explored

Introduction

When it comes to selling a car, there are a few extra considerations to take into account if the vehicle is being sold while it is still being paid off. Selling a financed car requires a bit more research and legwork than simply selling an owned car outright. There are legalities, financial implications, and other factors that must be taken into account before you sign on the dotted line.

What to Consider Before Selling Your Financed Vehicle

Before you begin the process of selling your financed car, there are a few considerations that should be made:

Research the Value of Your Car

The most important thing to do when selling a car is to know its true market value. This is especially important when selling a financed car, as the sale price can have a direct impact on how much money you will owe on the loan after the sale. It’s a good idea to research the Kelley Blue Book value of your car, as well as get a few estimates from local dealerships.

Understand Your Loan Terms

It’s important to understand the terms of your loan before you attempt to sell your car. Make sure you know what type of loan you have, such as a balloon payment, lease, or traditional loan. Additionally, check to see whether there are any early termination fees associated with the loan.

Check Your Credit Report

Your credit report can provide you with helpful information about your loan. Check to make sure that the balance and payment history of your loan is accurate. If there are any discrepancies or errors, contact the lender to get them corrected.

Navigating the Legalities of Selling a Financed Car

Once you have done your research and understand the terms of your loan, it’s time to start the process of selling your car. Here are the steps you need to take to legally sell a financed car:

Check the Lienholder’s Requirements

The first step in the process is to contact the lienholder (the company that holds the title to your car) to find out what their requirements are for selling a financed car. Some lenders may require you to obtain a notarized bill of sale from the buyer, or they may have other specific requirements that must be met.

Notify the Lienholder of the Sale

You must also notify the lienholder of the sale. They will need to know the details of the sale, including the buyer’s name, address, and contact information. The lienholder will then provide you with instructions on how to proceed with the sale.

Obtain the Title From the Lienholder

Once the lienholder has been notified of the sale, they will release the title to the car. You will need to obtain the title from the lienholder and provide it to the buyer. In some states, the title must be signed over by both the buyer and seller in the presence of a notary public.

Transfer the Title to the Buyer

After the title has been obtained from the lienholder and signed over by both parties, it must be transferred to the buyer. The buyer will typically need to take the title to the Department of Motor Vehicles (DMV) in order to register the vehicle in their name.

Understanding the Financial Implications of Selling a Financed Vehicle

When selling a financed car, it’s important to understand the financial implications of the sale. Here are a few things to consider:

Determine How Much You Owe

The amount that you owe on the loan will determine how much money you will receive from the sale. Make sure to calculate the exact amount you owe on the loan, as this will factor into the sale price.

Calculate Any Deficiency Balance

If the sale price of the car is less than the amount that you owe on the loan, there may be a deficiency balance. This is the difference between the sale price and the amount owed on the loan. It is important to understand the potential ramifications of a deficiency balance before you enter into a sale agreement.

Understand Your Responsibility for Deficiency Balance

In most cases, you are responsible for paying the deficiency balance. Depending on your loan agreement, the lender may pursue legal action against you if the deficiency balance is not paid. It is important to understand the terms of your loan agreement and be aware of the potential consequences of selling a car with a loan.

Tips for Maximizing Your Return When Selling a Financed Car

When selling a financed car, there are a few things you can do to maximize your return:

Clean and Repair Your Car

Before you list your car for sale, it’s important to clean and repair it. Even small repairs, such as replacing broken headlights or cleaning up scratches and dents, can make a big difference in the sale price. Additionally, adding a fresh coat of wax and detailing the interior can help to make the car look more appealing to potential buyers.

Advertise in Multiple Places

Advertising your car in multiple places can help to increase exposure and attract potential buyers. Utilize online car marketplaces and classifieds, as well as word-of-mouth advertising and attending local car shows or auctions.

Set the Right Price

When setting the price for your car, it’s important to take into account the current market value, as well as the amount that you still owe on the loan. Setting the right price can help to ensure that you receive the most money for your car.

How to Find Buyers for Your Financed Car

Finding a buyer for your car can be a challenge, but there are a few strategies you can use to increase your chances of success:

Utilize Online Car Marketplaces

Online car marketplaces, such as AutoTrader and Cars.com, are great resources for finding potential buyers for your car. These sites allow you to list your car for sale and reach a large number of people in a short amount of time.

Use Word-of-Mouth Advertising

Word-of-mouth advertising can be a powerful tool in finding potential buyers for your car. Reach out to friends and family and let them know that you are selling your car. You may be surprised at how quickly word spreads and how many potential buyers you can find.

Attend Car Shows or Auctions

Attending local car shows or auctions can help you to find potential buyers for your car. These events are typically filled with car enthusiasts who are looking for a good deal, so it’s a great place to showcase your car and attract potential buyers.

Strategies for Negotiating the Best Price for Your Financed Car

Once you have found a potential buyer for your car, it’s time to negotiate the sale price. Here are a few tips for getting the best price for your car:

Be Prepared to Counter Offer

When negotiating the price of your car, it’s important to be prepared to counter offer. Don’t be afraid to stand your ground and speak up if you feel like the buyer is offering too low of a price. It’s perfectly acceptable to make a counter offer and negotiate until you are both satisfied with the sale price.

Don’t Show Emotion

When negotiating the sale price of your car, it’s important to remain calm and composed. Don’t show emotion or get too attached to your car. Remember, the goal is to get the most money for your car, not to get emotionally attached to it.

Stick to Your Bottom Line

It’s important to set a bottom line before you enter into negotiations. Know ahead of time the lowest price you are willing to accept for your car and stick to it. Don’t be swayed by the buyer’s tactics or be tempted to lower the price just to make a sale.

Conclusion

Selling a financed car can be a complicated process, but with the right knowledge and preparation, it can be done successfully. Be sure to research the value of your car, understand your loan terms, and check your credit report. Additionally, it’s important to navigate the legalities of selling a financed car and understand the financial implications of the sale. Lastly, utilize tips for maximizing your return, know how to find buyers for your car, and use strategies for negotiating the best price possible.

Selling a financed car has its pros and cons. On one hand, you will be able to free up funds and no longer be responsible for making payments. On the other hand, you may be left with a deficiency balance and have to pay additional fees. Ultimately, it’s important to weigh the pros and cons and decide if selling a financed car is the right decision for you.