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Still owe money on your car? Here’s how to sell it if there is a lien on it


DNA Auto
08-20-2014, 12:41 PM
There are a lot of reasons to borrow money to buy a car. Maybe you got a great rate or one of those $0 down offers, or perhaps you didn’t want to plunk down a lot of cash for an asset that depreciates so quickly.

Whatever the reason, owing money on a car makes it trickier when it comes time to sell it. You have to satisfy the lien before you can receive the title (in other words, pay off your loan), receive the physical title before you can transfer it, deal with a buyer who may be nervous because there’s a third party involved … things that are just more complicated than if you own the car outright.

So what do you do?

1. List your car and find a buyer. For more information on how to do that, check out our previous post on selling your car privately. After finding a buyer and negotiating your best deal, contact your lienholder (the bank or finance company you borrowed the money from) and get the payoff amount. This will be good for 10 days, plus daily interest.

2. As noted above, you’ll have to pay off the lien before you can transfer the vehicle’s title to the buyer (who cannot register the car until that title transfer occurs). Depending on your particular circumstance, this can be a slight bump in the sales road. If you had put no money down when you bought the vehicle, or only made a small down payment, you probably owe more than you can sell it for since many vehicles depreciate fairly quickly. Of course, if you have equity in the car (if it’s worth more than what you owe), you’ll pay off what your lien and pocket the profit.

TIP: If you’re upside-down on your loan, have the buyer give you a cashier’s check made payable to your lienholder. You can send it directly to your lienholder, along with one from you for the difference. This will let the buyer know you’re honest and trustworthy.

3. Send the funds to the lienholder. If you send a regular check, they will probably hold the title until the check clears. Sending certified funds will speed up the process. Otherwise, getting that lien could take up to a month because some line holders will hold onto the title until the check clears and they are absolutely sure that the funds are in their account. Who really wants to wait that long in a private party (or any) vehicle sale?

TIP: If you don’t get cash or a cashier’s check from the buyer, make sure to wait for the buyer’s check to clear before sending money to your lienholder.

4. Transfer the title to the buyer. It may take a month or more to receive the physical title, depending on how you send the payoff amount.

5. Make sure to remove your plates before turning over the vehicle.

TIP: Don’t forget to cancel your insurance!

Rather than go through all those steps (and the hassle involved) there is an easy alternative: bringing your used car, van or truck to DNA Auto Wholesale. and we’ll take care of the rest.

Here’s how DNA does it (and streamlines the process):

1. We appraise your vehicle based on mileage, condition, VIN, and CARFAX report.

2. If you accept our offer and you owe money on the car, we’ll call the lienholder with you (or without you if you prefer) and determine the payoff amount, which is good for 10 days (plus the daily interest rate).

3. We will pay off that lien with a cashier’s check payable to the lienholder and send it to them for you. If there’s equity, we give you the cash (or a check—it’s up to you) on the spot.

4. We send the cashier’s check to the lienholder by FedEx overnight. This way your loan is paid off as soon as possible. Remember, you’re paying daily interest! Other companies may send a “soft check” by US Mail. This takes longer and could cost you money.

5. You cancel your insurance; we drive you home, take off your plates and give them to you, then give you all the paperwork in one neat packet including the bill of sale and plate surrender document.

6. The title comes to our office directly.

At DNA Auto Wholesale, our business is buying used cars of all types, from enthusiast models and high-end sports cars to family sedans. We’ll give you a fair price and a hassle-free experience, guaranteed. Every transaction is fully transparent and saves you time from start to finish. Contact us to find out more about how we work or to make an appointment to sell us your car—with or without an existing lien.

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