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Selling A Vehicle That Is Not Paid Off

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Hello everyone, 


I have a truck that we still owe about $12,000 on with the bank.  We are starting our journey to get out of debt so I want to sell it and use the money (equity) leftover to pay cash for a vehicle.  How should I go about selling a vehicle that still hasn't been paid off?  How do I handle it with the buyer?  I want to have a process in mind so that if a potential buyer is interested they won't be scared off by the fact that there's still money owed on the vehicle.  Thanks so much!

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While you may be honest, this is TOO high risk for private buyers. If you take off with the money they have to sue you to recover and many don't want that risk.


First you need to establish the REASONABLE value of your vehicle.  When did you buy it?  How long is it financed for?   What year, make, model?  Many people fail to realize that the nanosecond they drive off the lot with their new "baby" it drops anywhere from 25% (for foreign makers like Honda/Toyota that hold value) to as much as 35% (for domestic manufacturers) immediately.  That leaves even the best credit borrower upside down in their loan for the first 2 years minimum.  


In other words you need to be certain there is even equity in the vehicle.  If there is equity then you need to be realistic about what you can sell it for in your market.  Your best bet may be to find a CarMax they generally give a decent retail price and will do an outright purchase from you without an immediate re-purchase for another vehicle.  


If you do insist on a private sale then I would suggest a written contract specifying what your lender states the pay off on the vehicle is as of the date of that contract.  That buyer pays that amount directly to lender and X amount in equity difference directly to you both by cashier's check.  Lender may send title directly to you and you provide a written release to buyer within 72 hours of receipt.  You also want to make sure that buyer is aware that vehicle is sold AS IS and with no express or implied warranty. 

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