
If you’re planning to sell your car while there’s still an active title loan on it, you may be wondering if it’s possible. The answer is yes, you can sell a vehicle with an outstanding loan, but the process is more complex than selling a car that’s already paid off.
In a Nutshell
Selling a car with a title loan requires paying off the loan first, as the lender holds a lien on the car. You can explore options like negotiating with the lender, selling to a dealer, or refinancing. Once the loan is settled, you can transfer the title to the new owner.
Can I Sell a Car with a Title Loan?
Yes, you can sell a car that still has an active title loan, but the process is more complicated than selling a vehicle you own outright. When you have a title loan, the lender places a lien on your vehicle, meaning they hold legal interest in it until the loan is fully repaid.
Because of this, you’ll need to disclose the lien to potential buyers and either pay off the loan before the sale or arrange for the loan to be settled as part of the transaction. The title cannot be transferred to a new owner until the lien is released, so clear communication and planning are essential. Transferring the title and completing the sale cannot occur until the loan is paid off and the lien is released, so the car cannot be sold until these steps are completed.
Understanding Loan Terms
Before you take out a car title loan or attempt to sell a car with a title loan, it’s essential to fully understand the loan terms you’ve agreed to. A car title loan is a type of secured loan that uses your car title as collateral, and the details of your agreement can have a significant impact on your personal finance. Key elements to review include the loan amount, interest rate, repayment period, and any additional fees such as late payment or origination charges.
Take the time to read your loan agreement carefully and don’t hesitate to ask your title loan lender for clarification on anything you don’t understand. Knowing exactly how much you owe, what your monthly payments will be, and the total cost of the loan over its term can help you avoid surprises and make informed decisions. Understanding your obligations will also help you plan for the loan payoff process and prevent issues like default or repossession. By being proactive and informed, you can better manage your car title loan and protect your financial well-being.
How to Sell Your Car When You Have a Car Title Loan
If you’re planning to sell your car while a title loan is still active, there are a few options available. These options also apply to vehicles with active vehicle title loans, not just cars. While it’s possible to complete the sale, vehicles used as collateral for vehicle title loans will require extra steps due to the lien placed on the title by the lender. Below are several ways to handle it:
1. Pay Off the Loan First
The simplest and most straightforward option is to pay off the title loan before listing your vehicle for sale. Once the loan is fully repaid, the lender will release the lien and transfer full ownership back to you. The payoff can be made directly from your bank account, or you may use the loan proceeds from the sale if the buyer agrees to this arrangement.
With a clear title in hand, you can sell the car without any legal complications or concerns from buyers. This approach tends to attract more serious buyers, as it removes uncertainty about ownership and title transfer.
2. Sell Privately and Coordinate a Loan Payoff
You can still complete a private sale while the title loan is active, but it requires coordination. After agreeing on a sale price with a buyer, you’ll need to arrange for the loan to be paid off.
Depending on the lender’s policies, the buyer may:
- Pay you the full amount, trusting you to use the funds to pay off the remaining balance on the loan, or
- Directly pay the lender to clear the remaining balance and remove the lien.
In either case, the title must be transferred to the buyer once the lien is released. This option works best when both parties are clear on the steps for paying off the remaining balance and the timeline for completing the private sale.
3. Trade In the Vehicle
If you’re looking to upgrade your car, you may be able to trade it in at a dealership, even with an active title loan, especially if you want a newer vehicle. The dealer will typically pay off the remaining loan balance directly and apply the trade-in value toward your next vehicle. Many dealers are experienced in handling vehicles with negative equity and can help facilitate the trade-in process even if you owe more than the car is worth.
This method is convenient and minimizes paperwork, but keep in mind the loan payoff will be deducted from the value of your trade-in.
4. Sell to a Dealership
Some dealerships are willing to buy cars with outstanding title loans, even if you’re not buying another vehicle from them. If the car dealer agrees to purchase your car, they will usually handle the loan payoff with the lender and subtract the balance from the sale price. This is a fast option that eliminates the need to find a private buyer or pay off the loan yourself.
Refinancing Options
If you’re finding it difficult to keep up with your car title loan payments or want to secure a lower interest rate, refinancing could be a smart move. Refinancing a title loan means replacing your current loan with a new loan, either from your existing lender or a different title loan company, that offers more favorable terms. This could mean a lower interest rate, a longer repayment period, or reduced monthly payments, all of which can help you save money and avoid falling behind.
When considering refinancing, shop around and compare offers from multiple lenders to find the best deal. Some lenders specialize in refinancing car title loans and may offer incentives like lower fees or more flexible payment options. Just be sure to read the new loan agreement carefully and watch out for any hidden costs or high fees.
Refinancing can be a valuable tool for regaining control of your finances, but it’s important to work with reputable lenders and ensure the new loan truly benefits your situation.
Paying Off Your Title Loan: What You Need to Know
To sell your car with a title loan, you must first pay off the loan. Contact your title loan company to obtain the exact payoff amount, which may include the remaining loan balance plus any prepayment fees. Coordinating directly with your lender is essential to ensure the lien is released properly before completing the sale. Some buyers may prefer to pay cash to expedite the process and secure the car’s title quickly.
Paying off the car title loan upfront is typically the fastest and simplest way to proceed. Once the loan is settled, the lender will return your clear car’s title, allowing you to transfer ownership smoothly to the new buyer.
Alternative Solutions
If you’re struggling to pay off your car title loan, there are alternative solutions that can help you avoid default and protect your credit. One option is to reach out to your title loan lender and ask about hardship programs, payment extensions, or temporary reductions in your monthly payments. Many lenders are willing to work with borrowers who communicate early and honestly about their financial challenges.
Another approach is to consider using a personal loan or a credit card with a lower interest rate to pay off the loan balance. This can help you avoid the high interest rates often associated with title loans and give you more manageable repayment terms. If selling your car is an option, you can use the proceeds to pay off the loan and eliminate the debt entirely.
For additional support, consider consulting a financial advisor or credit counselor. These professionals can help you create a budget, explore debt consolidation options, and develop a plan to get your finances back on track. Taking action early can help you avoid repossession and long-term damage to your credit.
Legal Considerations
Laws governing title loans vary by state. Some states have specific regulations on selling a car with a title loan. State laws may also govern title transfers when a lien is present. It’s essential to check your local laws to avoid any legal issues.
Selling a car with an unpaid title loan can lead to lawsuits or penalties. Make sure the loan is paid off, or you have an agreement with your car title loan lender to prevent these complications.
Can You Transfer a Car Title with a Title Loan?
You cannot transfer the car title to a new owner until the title loan is fully paid off and the lender’s lien is officially released. When you attempt to process a title transfer through your state’s DMV, any active liens will be flagged, and the transfer will be blocked until the loan is cleared. Most lenders do not permit you to transfer title loans to another person, so the loan must be paid off before the title can be transferred.
If you’re planning to use the proceeds from the sale to pay off the loan, it’s essential to discuss this with your buyer upfront. Friends or family members may be more understanding and willing to wait for the title transfer process. However, private buyers, especially those you don’t know, are often less flexible and may expect an immediate transfer of ownership.
To avoid confusion or complications, be transparent about the loan and explain the steps required to release the lien. In many cases, the buyer can work with you or the lender to arrange a direct loan payoff, ensuring a smoother and more secure transaction for both parties.
How to Transfer a Title When Selling a Car
While each state has its own title transfer requirements, check with your local DMV to better understand your state’s guidelines. In most states you will need to:
- Gather Required Documents
- Vehicle’s Title and Lien Release: You’ll need the original vehicle’s title, which proves ownership, and a lien release if there was a loan on the vehicle.
- Bill of Sale: Outline the sale details for the new owner and DMV.
- Sign Over the Title
- Complete the Transfer: Sign the vehicle’s title and provide buyer information. Ensure the new owner signs it as well.
- Submit to the DMV
- Buyer Files with the DMV: The new owner registers the car in their name.
- Notify the DMV: Inform your local DMV of the sale.
- Sign a Release of Liability
- Submit a Release of Liability Form: This form, filed with the DMV, ensures you’re no longer responsible for the car after the sale.
Tips for a Smooth Title Transfer
A few extra steps will prepare you for selling your car swiftly with ease. Here are some considerations:
- Preparing Your Car for Sale: Ensure your car is in good condition before selling. Clean it thoroughly and fix any minor issues to attract buyers.
- Choosing the Right Buyer: Decide whether to sell to a private party or a dealership. Private sales may fetch a higher price, but dealers can offer a quicker transaction.
- Negotiating the Sale Terms: Be clear about your loan situation when negotiating. Transparency helps avoid misunderstandings and builds trust with the buyer. Make sure to calculate how much cash you will receive from the sale after paying off the title loan, so you know exactly how much cash you’ll have available.
- Working with Professionals: Consider hiring a real estate agent or financial advisor if you’re unsure about the process. Legal advice may also be helpful.
Financial Considerations
Paying off the title loan will affect how much you pocket from the sale. The loan term can impact the total interest paid and the final payoff amount, which in turn affects your net proceeds. Be prepared for a lower net amount, especially if the car title loan balance is high.
Keeping documentation in a safe place can help you in the future. Keep the bill of sale and the release of the lien in a secure place so that if you ever need them you know where they are.
Auto Title Loan Options
When exploring auto title loan options, it’s important to understand the different types of loans and lenders available. Some title loan companies offer online applications and instant approval, making it easy to access funds quickly. Others may require you to visit a physical location to complete the process. You’ll also find a variety of loan structures, including single-payment title loans, which require you to pay off the loan in full by a specific date, and installment title loans, which allow you to make monthly payments over a set period.
Each option has its pros and cons, so it’s crucial to compare lenders, interest rates, loan terms, and repayment options before making a decision. Be sure to research the laws and regulations governing title loans in your state, as these can affect your rights and responsibilities as a borrower.
By understanding your auto title loan options and carefully evaluating each lender, you can choose the solution that best fits your needs and avoid getting trapped in a cycle of debt. Always prioritize working with reputable lenders and make sure you fully understand the payment schedule and total cost of the loan before signing any agreement.
Conclusion
Selling a car with a title loan requires careful planning. By following these steps, you can navigate the process smoothly. Ensure the loan is paid off, understand the legal requirements, and prepare your car for sale to achieve the best outcome.
If you are interested in a title loan refinance we can help you! We have an easy obligation-free application that could help you get more favorable terms and keep your car. Visit our FAQ page to learn more or contact us with any questions you have.
Frequently Asked Questions
Do Title Loans Affect Your Credit?
In most cases, car title loans do not directly affect your credit score. Lenders typically don’t report payments to credit bureaus. However, if you miss payments and the lender repossesses your car, they might report the repossession, which could harm your credit. It’s always a good idea to ask each lender about their specific reporting policies.
What are 2 Advantages of Title Loans?
- Quick Access to Cash: Car title loans provide fast approval and funding usually one the same business day. This makes them a convenient option for emergency cash up to $50,000.
- No Need for Good Credit: Approval is based on the value of your car and your ability to repay the car loan, so having poor credit won’t disqualify you.
What Will Happen If I Miss a Title Loan Payment?
Missing a payment could result in late fees being added to your title loan balance. If you continue to miss monthly payments and default on the loan, the lender has the right to repossess your car to recover the outstanding title loan balance. This can be a serious financial consequence, so it’s important to stay current on payments.
Can I Use the Car I Am Buying as Collateral for a Title Loan?
Yes, as long as you own the car outright and the title is in your name, you can use it as collateral for a car title loan. Once you have the title, you can apply for a title loan and potentially borrow up to 50% of the car’s value.

Written by
Crystal Voogd
Crystal, with a bachelor’s degree in Family and Human Services and a minor in Finance, offers a unique perspective. Specializing in personal finance, Crystal’s clear and insightful writing covers topics such as title loans, budgeting, and credit management. Dedicated to empowering readers in their financial journey, Crystal provides reliable guidance for informed decision-making and stability.