Are you looking to sell your car but haven’t fully paid off your title loan yet? You may be wondering if it’s possible to sell a car with a title loan on it, or simply what the process is.

Selling a car is sometimes possible if you have a title loan, but the loan must be fully paid off before you can transfer the title to a new owner. This doesn’t mean that you can’t sell a car with a title loan, though, only that you need to take a few extra steps to do so.

Is It Legal To Sell A Vehicle With A Title Loan On It?

Nothing is stopping you from selling a vehicle you own. However, only the primary lienholder can transfer ownership of the car to another person. With new technology updates from state DMVs, it’s no longer possible to sell a vehicle without a valid title transfer. For instance, the California DMV now offers title transfers online.  You still need to submit the vehicle’s VIN, license plate number, purchase date, and purchase price to complete the transfer process.

Once you take out a title loan, a lienholder is attached to your vehicle. Another scenario is buying a new car from a dealership that’s financing it. In this case, there’s a lienholder on the car’s title until that loan is fully paid off.

Even if you purchased the vehicle rather than leasing it, you do not become the primary lienholder until you fully pay off the loan. This means you can’t sell the car with an active title lien until that loan is fully paid off. If you try to get around this by selling the vehicle to someone without the title, your state’s DMV will not recognize the new buyer as the legal owner of record.

How to Sell a Car with a Title Loan

The most straightforward way to sell a car with a title loan on it is to pay off the existing loan. Once you do that, you will be the legal owner of the vehicle and can sell it to whomever you want. At Premier Title Loans, we recommend using our title loan calculator to determine the best way to pay off your existing loan. It only takes a few minutes to enter your loan details, and there’s also a chance Premier Title Loans can offer pre-approval for a lower monthly payment or a shorter payoff term with refinancing.

This might not be possible, though, depending on how much money is still left on the loan and your financial situation.

One of the most common ways to sell a car with a title loan is to use it as a trade-in at a dealership when you purchase or lease a new vehicle. In this case, the dealership where you obtain the new car will use the trade-in value of your current vehicle to pay off the title loan, which in turn transfers ownership of the title to the dealership, effectively settling the loan on your behalf.

The upside is that it’s an easy way to figure out how to sell a car with a title loan. The downside is that most dealerships will require you to purchase a new vehicle to do this, and you will likely get a lower sales price (or trade-in value) for your car than if you sold it to a private party.

Does Anyone Buy Vehicles With A Title Loan On Them?

If neither of the above options suits you well, you may have other options for selling your vehicle.

So, the answer to the question of whether I can sell my car with a title loan elsewhere is … maybe. Keep in mind that you can never sell something that you don’t own. Even if the car is registered in your name and you have the keys, you’re not the first lienholder or “owner” if you don’t have the car’s title. If you need cash but aren’t ready to sell, an auto equity loan may be worth exploring instead.

If you prefer to sell it to a private party and don’t have the money to pay off the title loan first, you could use the money you get from selling the car to pay off your loan. Even in this scenario, you will still need the funds from the buyer before transferring the car.

So, what can you do if you can’t find someone to buy your vehicle? You might be able to find a dealer who buys cars with title loans without forcing you to purchase or lease another vehicle from them.

These dealers would determine the payoff amount for your title loan with your current lender and then send the money to the lender to settle the loan. They would then become the primary lienholder, allowing you to transfer the car to them.

In this case, if your vehicle is worth more than what you owe on the title loan, you could walk away with some money in your pocket. If it’s not, you may need to pay the dealer the difference between the title loan amount and what you got for the car.

Other options include refinancing the title loan to lower your balance, taking out a personal loan to pay off the title loan, or negotiating directly with your current lender to see if they’ll release the lien in exchange for a payment arrangement or a partial payoff.

Scrap A Vehicle That Has An Existing Title Loan

Scrapping a vehicle with an existing title loan is typically not possible until the loan is paid off. Some cars are sold for scrap after an accident or when they’d otherwise be salvaged or junked. As long as you pay off the title loan first, you can scrap the vehicle and have it noted as “salvage” on the car’s title.

Once the loan is paid off, you will become the vehicle’s primary owner. At this point, you can do whatever you want with it, including scrapping it and collecting the value of the materials.

Contact your lienholder first to determine the payoff amount. Once you receive a clear title, you can legally scrap the vehicle.

Selling A Car With A Title Loan On It Won’t Be Easy

In almost every scenario, only the car’s legal owner can sell a vehicle and complete the title transfer. Even in the case of a second lien title loan or refinance, there’s only one valid owner of a car at any given time. This means you’ll have to pay off a title loan before selling your car. Most companies will not allow you to use a vehicle with an active title loan unless you first settle the lien.

That said, there may be options for selling a car with an outstanding title loan. These options include working with your first lender to see if they’re open to a title loan buyout, or perhaps they will allow you to refinance an existing car title loan with a new lender.

If you are exploring ways to sell your car with a lien on the title or are looking for a new title loan, contact Premier Title Loans online or by calling 800-250-6279 today.

Jessica Chase

Jessica has been working in the title loan lending industry since 2012. Before that, she managed a team of customer service representatives for one of the largest payday loan companies in the US. Since coming to Premier Title Loans, she’s overseen our sales and marketing department and looks forward to educating consumers on their different financing options. Jessica is always open to feedback and questions related to short term loans!