Under The Hood

How to Sell a Financed Car Without Pulling Your Hair Out

Selling your car can be a major hassle.

What's even harder? Trying to sell your car when a bank holds the title.

But never fear. Here's a quick tutorial to help you navigate the process of selling a financed car without losing your sanity.

PS:  Don't want to learn how to sell a financed car by yourself? Skip to the end, and we'll tell you why you don't have to!

1) Call Your Bank

Reach out to your bank and find out how much you still owe on your car loan. They should send you a ten-day payoff, which is a quote on the amount owed that stays valid for 10 days. After that, per diem finance charges will be added for each day that the loan remains unpaid.

Ask them if they have any procedures in place for car owners looking to sell their financed vehicle to a private buyer or dealer. It's important that you understand what their policies are, as you will be working with them during the selling process.

2) Know Your Options

>> Option A:  Sell to an Auto Dealer

Pros: Convenient

Selling to an auto dealer is a convenient option for those who are strapped for time, and need their car sold right away. You can sell your financed car to them, or alternatively do a trade-in. Either way, they will handle all the paperwork, and you will leave with a check.

Cons: You'll get WAY less money for your car

Auto dealers exist to make a profit, and aren't going to be doing you any special favors when they make an offer for your vehicle. If you live in a county with an especially high sales tax, you can expect your offer to sink even further- as the dealer will have to compensate to remain profitable.

Here's how the process typically works when selling your financed car to a dealer.

Appraisal: When you take your car into the dealer, they will start evaluating it. It is typical for them to take your car on a short test drive, and ask for the vehicle history report to assess the risk of their purchase.

Loan Confirmation: After your vehicle has been appraised, you should let them know that there is an outstanding loan on your car. Have them call your bank to confirm what your remaining payoff amount is.

Payment: This can play out one of two ways.  

  • if the dealer's offer is GREATER than the amount of your outstanding loan, they will write you a check for the difference.
  • if the dealer's offer is LESS than the amount of your outstanding loan, then you have what is known as negative equity, and must write the dealer a check for the remaining difference.

The second situation is what happens when the value of your car decreases faster than your loan balance decreases. This situation is unfortunately very common for new car buyers, since the value of their vehicle decreases drastically immediately after being driven off the lot.

On average, the value of a new car depreciates by 19% within the first year of ownership!

>> Option B:  Sell to a Private Buyer


  • More flexibility in payoff options

  • You'll get WAY more money for your car


None when you go through Swap Motors! (Seriously)

When selling to a private buyer, you remove two things from the equation that ensure you will get a much better deal for your car.

  • Need to profit: Most private buyers purchase cars for the purpose of using them, not reselling them for a profit.

  • Sales Tax: Unlike auto dealers, private car buyers do not pay sales tax. Instead they pay what is called a "use" tax, which is a much more minor fee. For more details about the sales text, click here

Here's how the process typically works when selling your financed car to a private buyer.

Note: The ideal situation would be to pay off your loan so that your title is clear, giving you the authority to sign over your car to the new buyer.

Assuming this is not possible, here's how to proceed.

Inform the buyers of their purchasing options

Purchase without title

This requires a fair amount of trust from the buyer, and  will most likely only work with buyers who know you- i.e family and friends. In this situation, you would simply hand over the keys to the buyer, and then pay off the loan with the money you get from the sale. Once you get the title (this can take several weeks), you will sign over the title to the buyer.

Bank mediation

If your bank has a local branch, take a trip there with your prospective buyer. The buyer can bring the funds necessary to pay off the loan, giving you a clear title and the right to sign over the car to them.  You'll want to make an appointment beforehand, giving your bank time to prepare the necessary documents, and set aside employee time to mediate the transaction.

Escrow service

Another great way to give your buyer confidence in the sale despite your lack of title is to use a neutral third party to mediate the transaction. Escrow services make sure that both parties hold up their end of the deal. If the car buyer does not pay, they don't get the title.  If the seller doesn't deliver the vehicle and title, they don't get paid.


You can sell a financed car to a private buyer, or an auto dealer. If you go private, you'll make more money. If you go to a dealer, you'll save time.

But what if there was a way to sell your financed car and get BOTH of these benefits? Thanks to Swap Motors, there is! We'll send a certified mechanic to evaluate your vehicle, take pictures and videos, and create a listing in our marketplace- all for FREE.

Swap connects you with thousands of potential verified private buyers, and works with your bank to assist with the title transfer process once you've got a sale. Sounds amazing? It is.

But hey, why don't you just see for yourself? List your car on Swap Motors and schedule your free vehicle evaluation today! You'll be glad you did.