How to Sell a Financed Car Without Paying it Off
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How to Sell a Financed Car Without Paying it Off – EXPOSED

How to Sell a Financed Car Without Paying it Off – Are you having in mind to sell your car off without paying your loan in full? That is actually possible although it could be very difficult. But if that is your challenge, don’t worry we will help through this post so that you can know how to sell the car while still in the loan.

 You will need to get your full payoff quote from the lender if you want to sell a financed car without paying it off.

How to Sell a Financed Car Without Paying it Off

How to Sell a Financed Car Without Paying it Off

You have several means of selling your car, it could be to a private party, or to a dealer. Or trading it in. Now before you sell it out, there are steps you have to follow, they are as follows:

  1. Know the worth of the car
  2. Find out the amount of your payoff
  3. Understand your equity
  4. Discuss the sale with your lender

Know the worth of the car

The first thing you need to do is to determine how, much your car is worth presently in the market. You can find out about this through a vehicle valuation site like Kelley Blue Book or Edmunds. You can find the value of your vehicle, by contacting other used-car buyers, like Carvana and CarMax.

  • You will be asked to give information about your car: 
  • The year and the make,
  •  The mode of car, 
  • Overall condition 
  • Sometimes the license plate
  • Or the vehicle identification number (VIN)

NOTE: The condition surrounding your car will determine how much the car will be sold, but of truth, it is good you tell the buyer the truth about the car. Also, when you sell the car to a private party, you will make more money than if you trade it into a dealer.

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Find out the amount of your payoff

It is good you find out from your lender how much your payoff amount is. It is possible for the payoff amount to differ from the current loan balance. The balance of the loan, interest up to a specific date, and other fees, make up the payoff amount, and it is valid for 10 days, depending on the lender.

If you want to get the payoff information, call your lender and request it from him/her or you can get it through your lender’s website. Other things you need to do to ask your lender if your auto loan has a prepayment penalty before you pay off the loan and also review the Truth in Lending Act 

Understand your equity

You will understand the equity in your car, immediately you know the value of your car and the payoff amount, now the equity is the difference between the value of the car and the payoff amount. There are two types of equity you need to know, they are positive or negative equity.

Positive equity

Positive equity occurs when the worth of your car is more than the payoff amount, for example, if your car is worth N20,000 and the loan balance is N15,000, it therefore means that N5,000 is positive equity. After you have successfully sold out the car, you have to go with the new owner of your car to the Department of Motor Vehicles, all depends on the state where the car was registered.

Negative equity: selling a car that is worth less than the payoff amount can be very complicated and frustrating because even after selling the car, you will still have to look for more money to cover the negative equity amount. Negative equity occurs when the worth of your car is less than the payoff amount. 

The situation can also be referred to as being upside-down or underwater in your car. For example, if your car is worth N15,000 and the loan balance is N20,000, it, therefore, means that N5,000 is your negative equity. What that means is that you have to generate an additional N5,000 to settle your loan.

If you are selling your car on negative equity, there are some options available for you to sell the car and still pay your loan in full, they are:

Discuss options with your lender

Your current lender may have refinancing options that could help if you discuss with him about your plan.

Roll the negative equity to the future

If you are having the intention to collect a new car on loan, you can also decide to roll over the loan of the old car into the new one and be paying the old and new car loan little by little together. But you have to understand that, that could be very hard and overwhelming.

Cover the difference out of pocket. 

Try paying the difference from other sources that are available to you, and do so until the loan is finished.

Sell your car privately

In order for you to get more money for your car, don’t sell it to a dealer, rather sell it to a private buyer. That is the only way you can make more money to cover your loan.

Wait to sell

Don’t be in a haste to sell the car, continue to make little payments for the car until the negative equity turns into positive equity.

Discuss the sale with your lender

It will make a whole lot of sense if you discuss with your lender first before you even think of selling your car, this action will help you to understand two important things:

  • To understand the stand of the car equity
  • And their payoff requirements.


In the article, we have discussed with you four different steps you can follow so as to sell your Financed Car Without Paying it Off successfully, and we hope the article was helpful to you! If you still have anything that you want to ask us, feel free to ask. Don’t forget to drop your comment in the comment box below.

Amos Nya
Amos Nya is a Digital (SEO) Content Developer at Legit School Info is a team of Resource academicians and Consultants led by John Akpan. However, If you need personal assistance on this topic, kindly contact us.

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