Selling a Car with a Loan in Missouri

Are you considering selling a car while you still have a loan? It's entirely possible, though it does involve a few extra steps and a bit more time in comparison to the regular auto trade. Here, we present three steps to effectively navigate the process of selling your financed car in Missouri:

1. Contacting your lender to determine the payoff amount and gaining instruction for settling the loan.
2. Evaluating your car's worth.
3. Transferring ownership and finalizing the sale.

And now let's look at all three steps in detail.

When dealing with an active loan, the lender holds a share of ownership in your vehicle. To proceed, you should communicate with your creditor to inquire about the precise payoff amount and navigate the transaction process. Complete repayment of the loan is necessary to transfer car ownership and issuance of the title to the new owner. You have the option to request an official payoff letter from your lender, which should include the exact amount, a validity timeframe, and comprehensive instructions for completing the payment.

As the next step, you have two options, either  selling the car independently or through a trade-in arrangement. Opting for a dealership trade-in frequently offers a smoother process compared to selling to an individual. The dealer manages the necessary paperwork for ownership transfer. Clement Pre-Owned can assist you by streamlining the paperwork process, offering an equitable valuation for any vehicle you intend to trade for your upcoming purchase, and even provide the opportunity to receive up to $500 through a trade-in sales tax credit. Additionally, Clement Auto Group is prepared to supply a quote for the value of your trade-in. To explore this option, contact our sales team at Clement Pre-Owned and request a quote for the purchase of your vehicle.

Pricing guides like Kelley Blue Book, J.D. Power, or Edmunds can provide preliminary insights into your car's valuation. Deduct the established payoff amount from the calculated vehicle value. If the outcome is positive, you possess equity in the car. This indicates that the value of your car exceeds the payoff amount.

Conversely, a negative equity implies that you must allocate the entire car sale amount to the lender and address the negative equity through separate payment. This situation is also known as "upside-down" or "underwater." 

No matter if your equity is negative or positive, the process of selling your car typically involves you, the buyer, and the loan officer. During this transaction, the lending agent will oversee the transfer of the car's title to the buyer. It's advisable to communicate with your lender beforehand to ensure you have all the necessary paperwork and funds ready, facilitating a seamless transaction.

Documents you need to sell the car in the Missouri state, the USA

1. Title
2. Bill of sale
3. Emissions inspection
4. Safety inspection
5. Warranty documents
6. Maintenance records
7. Vehicle history report
8. Report of sle

Once the necessary arrangements have been made, the new buyer will proceed to the local Department of Motor Vehicles (DMV) with the signed title and relevant documentation. Here, they will complete the process of obtaining a new registration and title for the vehicle in their name.

Another significant aspect to comprehend when selling a car with a loan involves the concept of either positive or negative equity. Let's examine these two scenarios in greater detail.

What to do if you're selling with positive equity? 

Positive equity indicates that your vehicle holds a higher value than the outstanding loan amount, providing you with a range of selling options. For instance, if your car is appraised at $24,000, and your remaining debt is $19,000, you possess $5,000 in positive equity.

The proceeds from the sale need to be allocated towards paying off the loan and transferring the title. It can be managed differently based on whether you choose to sell through a dealer or directly to a private party. Dealers often handle these on your behalf, simplifying the transaction. Take Clement Pre-Owned dealership, for instance. Vehicle assessments at Clement Pre-Owned are both rapid and cost-free, potentially sparing you a full hour at the dealership when you commence the appraisal procedure online. In just minutes, you can acquire an estimated offer by inputting your Vehicle Identification Number (VIN), along with the make and model of your vehicle. Clement Pre-Owned will also handle all complexities involved in settling the loan on your behalf. However, in the case of a private party sale, the responsibility of settling the loan balance rests with you.

What to do if you're selling with negative equity?

Selling a car when you find yourself in a situation of negative equity introduces added complexity into the transaction. In such a scenario, not only you are required to remit the entire sale proceeds to the lender, but you must also allocate additional funds to cover the deficit resulting from negative equity. When you have negative equity, there are different ways you can try to sell your car and pay off the loan.

Here are some things you can do:

- covering the difference from your own finances,

- asking your lender for refinancing alternatives,

- continuing to make regular payments on your vehicle until you achieve positive equity,

- and incorporating negative equity into a new loan with a different creditor.

Transferring most personal loans to another individual is generally not allowed in the US. Limited exceptions exist, notably for mortgages and car loans. But you need to evaluate the expenses linked to the auto loan transfer. These costs include processing fees imposed by the bank for the transfer,  charges for car registration, and car insurance transfers. Together these extra costs could make this loan transfer a non-profitable offer for the buyer. So, seeking a new loan to settle the existing one is often a smoother route.

Yes, once you secure approval from a new lender, you have the green light to refinance your car loan. The process of refinancing a car loan entails acquiring a fresh loan to settle and supplant your existing one. As long as you fulfill specific criteria outlined by the refinancing lender, you are eligible to refinance your car loan. These often encompass factors such as the car's age and mileage, along with the outstanding balance of the current loan.

Yes, you can add someone to an existing car loan, but the process involves refinancing it. Refinancing means replacing your current loan with a new one, often with more favorable terms.

Adding a co-borrower to your car loan can offer advantages. Combining incomes may help you qualify for better credit terms than you would individually. This potential for improvements could lead to more savings over the remaining loan period. It's important to note that for someone to become a co-borrower, they generally need a credit score at least as good as yours. Once they sign the loan documents, they share equal ownership of the vehicle.

While you and another person can borrow a joint loan under both of your names, you can't directly transfer your loans to someone else. It's crucial to fully understand the implications and potential outcomes of joint loans before proceeding with an application.

Yes, it is fine to prepay or foreclose a car loan if the opposite is not clearly written in your loan agreement. Prepaying a car loan means paying off the loan amount before the designated tenure is completed. This can be done through partial or full prepayment. Sometimes, a couple of days for the foreclose can save a monthly payment for your budget.

However, it's important to note that some lenders might impose a penalty for prepayment, as they might lose out on expected interest. This penalty is typically calculated based on the outstanding loan amount. Such situations appeared relatively rare, but it’s smart to ask this question to the credit officer. Even if prepaying a car loan early might result in a prepayment penalty, it can be advantageous in the long run by reducing the amount of interest paid. One of the significant benefits of prepaying a car loan is that it eliminates the need for monthly payments. Moreover, when you fully pay off a car loan, you also remove the hypothecation on the vehicle, gaining complete vehicle ownership.

It's essential to remember that each lender has their own terms and conditions for car loan prepayment. It's recommended to thoroughly review your lender's prepayment clause.

Selling a car with an existing loan is indeed possible, though it requires some additional steps and considerations. Clement Pre-Owned dealership can assist you in your journey of selling a car with a loan by offering streamlined paperwork and a fair offer, making the process more convenient. By following these steps and guidelines, you can successfully navigate the process of selling a financed car in Missouri. Get in touch with our finance experts to get the answers to your questions and overcome any difficulties with selling your financed car.