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Should you Sell your Car to Settle a Loan?

Should you Sell your Car to Settle a Loan?

Selling your car to settle an auto loan is only one of the many ways to get out from under an unaffordable loan. While usually a step of last resort, it is still an option and that’s what we’re discussing today.


Selling your car to a dealership is the simplest, fastest way to settle a loan or make some money to help settle a loan.


Settling an unaffordable auto loan


Selling your car is only one of many options for getting out from under a loan.


You could refinance the loan or renegotiate it if you’re in genuine trouble. But, if you want rid of it altogether, you can sell the car to settle it.


How easy it is depends on whether you have equity in the car or not.  Is the car worth more than the outstanding loan? If so, you have equity.


If the car has depreciated so it’s worth less than the loan, that’s negative equity. You can still sell the car but you’ll need to top up the cash from the sale to settle the loan.


Selling your car to pay off the loan


To legally sell a car, you need the title to that car. The only way to get the title is to pay off the loan, which is what you’re trying to do.


We can help. We’ll work with you and your lender to settle everything so the loan is paid off and you end up free and clear.


You’ll need to follow these steps:


Talk to your lender


You’ll need to notify your lender that you’re planning to sell the car. This is a legal requirement as you don’t technically own it yet.


Presumably you will have discussed your situation with them anyway to try to come up with a solution, but you’ll need to formally notify them you’re planning to sell.


You’ll also need a settlement figure from them so you know whether you have equity or will need to top the amount up with cash.


Get the car valued


We value your car as part of the process but it will help you to have an idea of what it’s worth too.


We typically recommend checking your exact make, model, year and trim on Carfax, Kelley Blue Book, Auto Trader, eBay, Craigslist and Kijiji. Bear in mind colour and mileage too, as that can impact value.


If the current value exceeds the settlement figure, you’re good to go.


If the current value is less than your settlement figure, you’ll need to top up with cash to settle the loan.


You can only sell the car if you can settle the loan in full.


Get the car appraised


If you’re ready to sell your car to us, make an appointment to have your car valued at our dealership. We’ll check it over, take it for a short test drive and make you an offer.


If you accept the offer, we’ll set everything up. We’ll work with your lender and coordinate with them to pay off the loan. We pay your lender and the lender gives us the title to the car.


If there is any money left over, we deposit it into your bank as soon as the deal is done.


Depending on the lender, the whole process could take a couple of hours or a couple of days. Our side can be done quickly, but some lenders take longer than others, but we’ll get the deal done as quickly as we can.


For any questions or concerns, please don't hesitate to contact us here!


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Categories: Car Selling