Autotrader: How do I sell my car if the lender holds the title?

Many car owners sell their vehicles privately, whether to dealers or other drivers.

Likewise, many car owners have their cars financed through banks or credit unions. That begs the question: If you don’t hold the title, how can you sell a car?

Tips to sell a car if bank holds the title

Check out these tips for car owners looking to sell a vehicle if the bank holds the title and ease your mind during the sales process.

Determine the payoff

The first step is to find out what you still owe on the car. You can do that by calling the bank that holds the loan and simply asking what your payoff amount would be.

While you’re on the phone, be sure to ask if they have any important procedures for a vehicle owner who’s selling his financed car to a third party.

Use the buyer’s money

Here’s the tricky part: Once you’ve determined the payoff amount and you’ve sold the car, you’ll have to use the buyer’s money to pay off the note. Of course, you can use your own money, as well. For many sellers, however, paying off the car won’t be possible without the buyer’s money.

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The result is that some buyers won’t be comfortable with this type of transaction. To ease a potential buyer’s worry, ask the buyer to meet you at the bank where your car is financed and ask an employee explain the situation. If the buyer remains uneasy, you may have to use your own cash to pay off the loan — or look for a different buyer.

The good news is that many banks will accept payment directly from the buyer. We suggest asking the buyer write two checks: one to your bank for the payoff amount and one to you for the remainder of your deal amount.

Transfer the title

Once the buyer pays for the car and you pay off the loan, the title is free and clear.

Most banks give you two options: You can take the title, or you can let the bank know where to send the title. If the buyer is financing the car, your bank will need to send the title to the buyer’s bank. Otherwise, the title can go directly to the buyer.

Read: 5 tips for young drivers to help lower car insurance

Tricky, but not impossible

Those looking to sell a car while the bank holds the title will have to do a little more legwork, but it’s not impossible. Just be sure to go out of your way to ease the buyer’s concerns.

More: 7 easy ways to lower the costs of car ownership

After all, the buyer is spending a large amount of money — and he or she is acting on your word that you’ll send along the title.

This story originally ran on Autotrader.com.

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January 29, 2021 at 10:03PM

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