Selling a car with a title loan on it is possible but you must fully pay off the loan before transferring the title. To legally sell a car, you must be the legal owner of the title, but when you have a title loan, your lender is the actual legal owner.
In this case, you have three strategies:
Option 1: Use the proceeds of the sale to pay off the title loan
Option 2: Ask a friend or family member for a short-term loan to pay off the title
Option 3: If your title loan lender allows the new buyer to take over the loan
You must know:
Ultimately, paying off your title loan before selling your vehicle is ideal. If this is not possible, check with your lender to see what they allow and evaluate your options for selling your car with a title loan.
How to Sell Your Car When You Have a Car Title Loan:
If you have a title loan on your car, it doesn’t mean you’re stuck with it. There are ways to sell a car with a title loan, just like you can with other vehicle loans but with a few more steps. So who buys cars with title loans? Let’s find out.
Option 1: Selling a Car With a Title Loan to a Private Party
When you take out a title loan, you no longer own the title; the lender does. This can make selling your car privately with a title loan tricky, the biggest reason being that buyers typically avoid purchasing vehicles with a title loan.
If you don’t have the funds in your bank account and need the buyer’s funds to pay off the title loan, there will be a delay in the buyer getting possession of the title.
This means the buyer must pay you for the car in a private buyer transaction. Then, you can pay off the title loan using the funds from the purchase. To do this, file paperwork with the DMV and the lender to prove you paid off the loan. This allows the DMV to put the title back in your name. This process can take a couple of weeks.
Bottom Line:
While there are many who find a private party agreement like this time intensive and are uncomfortable with the level of trust it involves, there are some buyers out there willing to take it on. If you need to sell the car in a hurry, this may not be your best option.
Option 2: Selling a Car With a Title Loan to a Dealer
Before selling a car with a title loan to a dealer, ask your lender if the loan is transferable. If it is, you can transfer the loan to the dealer and wash your hands clean of the car. If not, you must settle the debt before selling a car to a dealership.
Many dealers are familiar with this process. They will contact your title loan lender for the payoff amount to satisfy your title loan balance. Then, the cost to pay off the loan will be subtracted from the car’s value. You can then choose to walk away and purchase a car elsewhere or trade in your vehicle.
Bottom Line:
This option is great if your title loan company allows title loan transfers. It is much quicker, with fewer hoops to jump through for the seller and the buying party isn’t waiting in limbo. Unfortunately, many title lenders do not support this option.
Option 3: Trading in a Vehicle With a Title Loan
The same process is true if you trade in a vehicle with a title loan. You’re essentially selling the car, so you must settle your title loan first. The remaining balance after the dealer pays off your title loan will be applied to your next vehicle with the dealer.
Bottom Line:
As with option two, this is a great choice if you are looking for a simple and efficient sale and your lender allows title transfers. However, you are at the mercy of your lender.
Selling Your Car Isn’t the Only Way!
Oftentimes, those looking to sell their vehicle with a title loan have run into trouble with their ability to repay the loan. But selling your car isn’t the only way to be free of your title loan. There are other things you can do to make your payments more manageable or even pay the loan down more quickly, including:
Refinance with a lower interest rate
If you want to pay off your title loan balance and your credit qualifies you for a personal loan with a lower interest rate without collateral, you can use these funds to pay it off.
Negotiate with your lender
Many lenders will work with you if you are having trouble making your payments according to the loan’s original terms. You aren’t the only one who benefits from avoiding default. By working with you to restructure your loan terms, your lender can avoid extra paperwork and additional costs related to the repossession process and avoid losing money on the loan by sending your car to auction.
Start a side hustle
If you want to get out of your title loan, it may be helpful to temporarily work a side hustle, work overtime, or borrow money from a trusted friend or family member.
Consult a financial advisor
If you have difficulty making payments, consider seeking help from a professional to help you get your finances in order and create a strategic plan to stretch your money further.
Research all of your options:
We encourage you to do your due diligence and research all of your options. Always consider the amount you need, what you are able to afford, and how long you are prepared to pay on the loan. Title loans are meant to provide relief to those experiencing a financial emergency. The loans are expensive and have high interest rates, so they should only be used as a short-term solution.
Refinancing Your Title Loan With Montana Capital
Are you having trouble repaying your title loan? Refinancing your loan may help.
What does refinancing a title loan mean? Basically, refinancing means replacing a current loan with a new one with different terms.
You can get new terms for your title loan by refinancing with Montana Capital or any other title loans lender, but it doesn’t solve the problem that you’re short on cash.
Remember, it’s much easier to get a new title loan, pay off your old debt, and start paying the new loan off. When choosing a new lender, make sure to shop around.
Can You Scrap a Car With a Title Loan?
You cannot ‘junk’ or scrap a car with a title loan. You don’t own the car when you have a title loan, so it’s not yours to scrap. Instead, you must finish paying off the loan, and then you can do what you want with the vehicle when you possess a clear title.
Does a Car Title Loan Affect Your Credit?
Car title loans may affect your credit. That usually depends on the lender you work with. For example, at Montana Capital, we do check your credit history, but we don’t report title loan balances to the credit bureaus.
Can I Get a Title Loan With a Bill of Sale?
You cannot get a title loan with only a bill of sale. You must have the title in your name with all required documents to qualify. For more information about the title loan process, including documents needed and other requirements, please contact us. You can also apply online and find out how much cash you can receive. It’s fast, secure, and free!
Is a Title Transfer Possible?
Not all lenders allow you to transfer title loans. Always ask your lender before assuming you can transfer it. If your current title loan lender allows for title transfers, Montana Capital Car Title Loans has refinance programs that may be able to help you.
How Title Loans Work?
A car title loan is a short-term loan where your vehicle is used as collateral. To qualify, vehicles must be in the borrower’s name and paid off without any existing debts or liens.
At Montana Capital Car Title Loans, the biggest qualifying factor is your ability to repay the loan. While your credit may be checked, borrowers may receive up to 70% of their vehicle’s current value, even if you have a bad credit score! You can apply online and get an approval decision within 24 hours or less, all while driving your car for the duration of the loan!
Can You Sell a Car With a Title Loan on It: The Bottom Line
‘I want to trade my car in, but I have a title loan.’ Don’t let that stop you!
While the process can be a little roundabout, selling your car with an existing title loan is possible. You just have to find the right buyer willing to work with you.
Just remember that paying off the previous lender and the existing title loan first is essential. The lien must be released before the vehicle can be sold and the title transferred. Find out what steps you need to take from your lender.
So whether that means finding a dealer to pay it off for you, creating a private party selling agreement, or working an extra hustle to pay down your loan, your goal is within reach!
If you’re in a financial bind, apply for a title loan with Montana Capital and receive an approval decision in as little as 24 hours!
Written by
Samantha Hawrylack
Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.