If you’ve taken out a title loan and are now thinking about selling your car, you’re not alone. Many people find themselves in this exact situation.
And yes, you can sell a car with a title loan — but there are a few important things to know first.
This isn’t an unusual or illegal situation as long as it’s handled correctly. The key is understanding how title loans work, your responsibilities as the seller, and what steps are needed to make the sale legal and smooth.
If you need help, Titlelo can assist with refinancing your title loan, providing payoff guidance, and helping you explore options like selling or trading in your vehicle.
| Key Takeaways 1. Yes, you can sell a car with a title loan – but the loan must be paid off as part of the sale. 2. Selling without disclosing the title loan is illegal and could lead to serious legal trouble. 3. Dealerships often handle lien payoffs, making them a convenient option. 4. Private sales require extra coordination, including payoff timing and paperwork. 5. Refinancing through Titlelo can help reduce your loan burden and simplify the process. 6. Always get everything in writing, including the payoff quote and proof of lien release. |
Is It Legal to Sell a Car with a Title Loan?
The short answer: yes, it is legal to sell a car with a title loan, but only if the lien from that loan is properly dealt with.
When you get a title loan, the lender places a lien on your car. This lien means the lender has a legal claim to your vehicle until the loan is paid off. Even though the car is in your possession, the title is technically not fully yours to transfer until that lien is removed.
| Be Mindful Trying to sell the car without paying off the title loan or without telling the buyer is not only a bad idea – it could be considered fraud. You’re legally required to disclose any liens on the title. |
In private sales, it’s your responsibility to pay off the loan and clear the lien before transferring ownership. In trade-ins or dealer sales, the dealership will usually handle the lien payoff for you as part of the transaction.
What Happens If You Try to Sell a Car with a Lien?
It’s possible to sell a car with a lien, but there are some things both the seller and buyer need to understand.
Can Ownership Transfer While a Lien is Active?
No, not fully. You can’t transfer a “clean title” to a new owner until the lien is released. Even if you give the buyer the keys, the car still legally belongs (in part) to the lender.
What Will Buyers Need to Do?
Buyers need reassurance that the lien will be cleared. Often, the sale will involve paying the loan off at the time of sale, either by sending payment directly to the lender or using an escrow service. Buyers should never agree to take on your title loan unless the lender officially approves a loan transfer (which is rare).
Common Risks and Misunderstandings
A common mistake is thinking the buyer can just “take over the loan” and continue making payments. That’s not how title loans work. The original borrower is still on the hook unless the loan is officially transferred or paid in full.Another risk? Selling the car without paying off the loan could lead to repossession—even if the car is in the buyer’s hands.
Who Buys Cars with Title Loans?
Dealerships
Many dealerships routinely buy cars with title loans. They will contact your lender, pay off the loan directly, and deduct that amount from your trade-in or sale value. This is often the simplest route, especially if you’re looking to get a new vehicle.
Specialty Buyers
There are companies that specialize in buying financed vehicles, including those with title loans. They handle lien payoffs much like dealerships do, although they may charge fees or offer slightly less than private market value.
Private Buyers
Selling to a private buyer is possible, but more complex. Most private buyers aren’t familiar with how liens work, and they might hesitate if they don’t immediately get a clean title. This route requires extra transparency and coordination with your lender.
| If you’re wondering who buys cars with title loans, the answer is: dealers, some specialized buyers, and occasionally private parties (if they’re informed and comfortable with the process). |
Can I Sell My Car with a Title Loan On It? Here’s How
Yes, but follow these steps carefully:
Step 1: Contact Your Lender
Ask your lender for the payoff amount. This is how much you need to pay to satisfy the loan and remove the lien. Request the amount as of a specific date, and ask what their procedures are for lien release.
Step 2: Be Transparent
Let your potential buyer (or dealer) know there is a title loan. Transparency builds trust and ensures everyone is on the same page.
Step 3: Pay Off the Loan
There are several ways to handle this:
- Before the sale: If you have the funds, paying off the loan in advance is simplest.
- At the point of sale: Use the buyer’s payment to pay off the loan. This might involve going together to the lender or using an escrow service.
- Trading in: A dealer will usually take care of the payoff directly.
Alternative Options
If you’re struggling with a high-interest loan or tight finances, refinancing the title loan through Titlelo could be a smart move. Lowering your payments may give you time to sell the car properly or even keep it.
Selling a Car with a Title Loan to Pay Off Debt
For many people, the goal is to sell the car, pay off the loan, and move forward debt-free. That’s absolutely possible, especially if your car is worth more than the loan balance.
Be cautious about “rolling over” the debt into another title loan. While this can provide short-term relief, it often leads to a cycle of high-interest debt.
If you’re unsure of the best path forward, Titlelo can help you understand your options. We connect people with lenders who offer refinancing or buyout solutions, and we can explain what makes the most sense in your situation.
Tips for Selling a Car That’s Not Paid Off
- Always be honest: Disclose the lien to any potential buyer.
- Get everything in writing: This includes the payoff amount, the bill of sale, and proof of payment to the lender.
- Don’t hand over the keys until the lien is cleared: Make sure the lender has been paid and the lien released before transferring ownership.
- Use secure payment methods: Avoid cash or personal checks when paying off a title loan.
Selling Your Car with a Title Loan: What You Need to Remember
Selling a car with a title loan is possible and legal, but it takes extra steps. The most important thing is to involve your lender and be transparent with buyers.
Avoid the temptation to “just sell it and deal with the loan later.” That can lead to legal and financial trouble.
Whether you need help getting a payoff quote, refinancing your current loan, or figuring out your next steps, Titlelo is here to help. We specialize in helping people navigate the challenges of title loans so they can move forward confidently, saving time and stress.
FAQs
Is it illegal to sell a car with a title loan?
No, but you must pay off the loan and release the lien before transferring the title. Selling a car without disclosing the lien is illegal.
Can I trade in a car that still has a title loan?
Yes. Dealerships often accept trade-ins with title loans and will handle the payoff directly with your lender.
What happens if the buyer doesn’t pay off my title loan?
You’re still responsible for the loan until it’s paid. If the buyer doesn’t cover it, you could face repossession or collections.
How do I get the lien removed from my title?
Pay off the loan in full. The lender will then release the lien and either send you the title or notify your state DMV.
Will a dealership buy my car if it has a title loan?
Yes, most will. Dealerships are equipped to handle lien payoffs and transfer titles properly.
| Need help figuring out your title loan payoff or exploring refinancing options? Contact Titlelo today to talk to a real person who can walk you through your choices. |
Chad is a seasoned executive with an impressive track record spanning over two decades in the Fintech sector across diverse technologies and financial industries. With a wealth of knowledge accumulated throughout his career in finance & technology, he is dedicated to ensuring that both our employees and clients benefit from the highest levels of expertise and an unwavering commitment to customer service. Chad’s forward-looking approach and exceptional leadership skills have played a pivotal role in the success of his businesses, empowering consumers to proactively navigate the ever-evolving challenges of everyday life. When he’s not charting new horizons in the business world, Chad enjoys quality time outdoors with his wife and kids, as long as the Texas weather doesn’t hit a scorching 110 degrees! 