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How to Sell a Car With a Lien | Credit Karma

it is possible to sell a car with a lien. but if you plan to sell your car privately, you will have to work harder.

A lien on a car gives the lienholder (usually your car loan lender) a legal claim to your car until you’ve paid off the loan. This means that you typically won’t be able to sell your car and transfer ownership until the lien has been paid.

Let’s take a deeper look at how to sell a car with a lien privately or trade in your vehicle at the dealership.

  • contact the lienholder
  • trade in or sell a lien-car at a dealership
  • sell a car with a lien to a private party

contact the lienholder

If you’re thinking of selling your car, the first step you should take is to contact the lienholder. ask your lienholder to give you the exact amount needed to pay off your loan so you can determine how much money you need to make on the sale.

If you plan to sell your car to a private party, ask your lender about the process you need to follow to pay off your loan and transfer the title to the buyer.

trade in or sell a car with a lien at a dealership

If you plan to trade in your vehicle at an auto dealer, the dealer may pay off your loan as part of the trade-in. in this case, the dealership would likely handle the title transfer.

Although trading in or selling your car at a dealership may be easier than selling it privately, you typically get less money for your car. Since a dealer wants to profit from the future sale of your car, they typically won’t give you as much for your vehicle as a private buyer who is likely just looking for transportation.

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Keep in mind that if you’re behind on your loan and owe more than your car’s trade-in value, you’ll still have to pay the difference between your loan balance and what the dealer gives you for your trade-in.


If the dealer offers to pay the full amount you owe on your loan, confirm how you are paying the loan. If you’re trading in your car, you’ll want to make sure you’re not just adding your outstanding balance to your new loan, which will increase your monthly payment.

sell a car with a lien to a private party

Selling a car with a lien to an individual is a different process and may require some additional steps. If you sell privately, you’ll need to pay off your loan before you sell the car or, if your creditor allows it, find someone who’s comfortable paying off your car loan for you.

Selling your car privately may take longer, but you’ll likely get more money for your car than trading it in or selling it to a dealer. here are a couple of options you may have to sell your car privately and transfer the title.

pay off your loan before you sell

If you can pay off your loan balance, your lender will usually send a lien release document (depending on the state) to the state transportation agency so the car title can be updated and transferred to you.

Once you receive the title, you can transfer it to the person who buys your car.

the buyer pays his loan

If you can’t pay off your loan, your creditor may allow a buyer’s check for the amount of the settlement in exchange for the car title. To simplify the process, you can go to your lender’s office with the buyer to complete the sale.

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If it is not possible to go to the lender’s office, another option may be to set up an escrow account in which the buyer’s money is held until the title is received. the escrow service can handle the paperwork and make sure all conditions of the sale have been met before the buyer’s funds are released to you.

While using an escrow account can give the buyer peace of mind, you will need to pay a fee to the escrow company for their services. you or the buyer can choose to cover the fee individually, or you can agree to split the cost equally.

what’s next?

Selling a car with a lien can be tricky, especially if you plan to sell it to a private buyer. Be sure to check with your lienholder first to see if your lease allows it and, if so, if there is a preferred process for completing the sale and transfer of title.

If you’re having difficulty finding a private buyer willing to buy a car with a lien, you may want to postpone the sale until you can pay off the car loan.

Similarly, if you’re having trouble selling or trading in your car at a dealership because you owe more than your car is worth, you may want to wait until you can build some equity in your car by making extra payments or paying more. than the amount owed each month. But be sure to find out first if your lender charges a prepayment penalty.

For more car selling tips, check out our complete guide to selling a car.

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