How to Sell My Car When I Still Owe Money on It

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You may want to sell your car, but realize that you need to pay off the loan before you can. This is commonly called being upside down in the loan. This often happens when you buy a car new, since it depreciates thousands of dollars as soon as you drive it off of the lot. It can also happen when you trade in a car and the loan that you still have on it, to buy a new car. The dealer will roll the old loan into the new loan amount.

If you have realized that you cannot afford your current car payment, this can add a lot of stress to the situation. You can get out of this situation without totally destroying your credit. Here are strategies that can help you get out of a car loan. 

Sell the Car Yourself

Selling the car yourself is the best option, because it can help you break the cycle of owing too much on your car. It does take more work, but it can actually save yourself a lot of money on interest. Here is what you will need to do to sell the car yourself. 

  1. Determine How Much You Can Get for Your CarFirst, you need to determine how much you can sell your car for. A good place to look is at Kelly Blue Book. You need to look at the private seller amount, since this is the best way to get the most for your car. As you look over the criteria, be honest in the condition and value of your car. This will give you the best way to determine how much to list your car for. You may decide to list a few hundred over your asking price so you can be haggled down.
  1. Once you have determined your selling price, you need to determine how much you owe on the loan. Subtract your selling price from your loan amount. This is the amount that you will need to come up with in order to sell the car. You should contact your bank and explain that you are planning on selling your car. You need to find out how you can get the title from them when you do sell. Often the banks have the titles in a centralized location, and it may take a few days to get the title to you. So you may want to see if they can do something to speed up this process.
  1. Next, you will need to come up with the difference between the loan amount and the amount you expect to sell your car for. You may choose to dip into any savings that you have to cover this, otherwise, you will need to take out a loan. You can talk to credit unions or banks in the area to see if you qualify for an unsecured loan. While it may seem like you are borrowing money to get out of debt, you are in reality reducing the amount that you owe. You will be able to pay off this smaller loan much more quickly. It should become a top priority, because unsecured loans generally have higher interest rates.
  2. Once you have determined how you will pay for the difference you need to put your car on the market. Craigslist is a great way to do this. You can also put it in your local classifieds or post it online at other sites. You may be surprised at the number of offers you get in a matter of hours. If you are not getting any responses you may have decided to sell the car for too much, and you should consider adjusting your offer.

Roll Your Car Loan Over

Another option is to roll your old loan into a new car loan and to trade your current car in. This is not the best option, because it will just make your situation even worse than it already is.

If you are interested in this option, you will just need to talk to your dealer about financing with them. Most banks will not finance a new car loan for you if they are going to loan you more than your new car is worth. 

Refinance Your Car Loan

Another option is to refinance your car loan so that you have a lower interest rate. If you want to pay if off more quickly, you can have a shorter term on the loan, or you could just increase the amount you are currently paying on your own to pay off the loan more quickly. This may be a good option if the company or bank you are working with is having issues such as losing payments. If you have missed payments, you may not qualify for a car loan. 


  1. When you have found a buyer, you will need to go to the bank with the money. You should have your loan amount, as well as the money from the buyer (accept cashier checks, money orders or cash only). They will fill out the paperwork so that the title is transferred to the new owner.
  1. If you need to buy a car to replace the one you are upside down on, you should find an older car that is only one or two thousand dollars. Hopefully, you will only have to drive it for a year or two as you work to get out of debt. You can find reliable cars at these prices. This is a good option, since you may not qualify for a car loan if your credit has been damaged.
  2. Make it a goal to pay cash for your next car. This is one of the most important things that you can do to help you begin building wealth. It is important to stop having monthly payments that you need to make to people. Take the time to research so you do not make any mistakes when you buy your next car
  3. Be sure that you put this loan in the correct place in your debt payment plan. You will want to work to get out of debt quickly, so that you can begin saving cash for a nicer car.