First, contact your lender. You can do this by calling their customer service department. Some lenders also offer the option to request the payoff amount online through their website or mobile app. It’s important to have your loan account number handy when you make this request.
Next, ask for the exact payoff amount. This is the total amount you need to pay to fully settle your loan. It includes the remaining principal balance, any accrued interest, and any additional fees or charges that may apply. Make sure to specify that you need the payoff amount as of a specific date, as interest accrues daily.
Once you have the payoff amount, write it down. It’s crucial to keep a record of this information for your reference. You might also want to ask your lender for a payoff letter, which is a formal document that outlines the payoff amount and any instructions for making the payment. This letter can be useful if you need to provide proof of the payoff amount to a potential buyer or another party.
Finally, review the payoff instructions provided by your lender. This may include details on how to make the payment, such as the acceptable methods of payment (e.g., check, wire transfer, online payment) and the address or account information where the payment should be sent. Following these instructions carefully will ensure that your loan is paid off correctly and promptly.
What If…
The lender provides an incorrect payoff amount? If you suspect that the payoff amount provided by your lender is incorrect, double-check the details. Compare the amount with your latest loan statement and any recent payments you’ve made. If there are discrepancies, contact your lender immediately to clarify and request a corrected payoff amount. Keeping accurate records of your loan payments can help resolve any issues quickly.
The payoff amount changes before you make the payment? Since interest accrues daily, the payoff amount may change if there is a delay between when you receive the payoff amount and when you make the payment. To avoid this, request the payoff amount as close to the payment date as possible. If there is a delay, contact your lender again to get an updated payoff amount before making the payment.
The lender does not provide a payoff letter? If your lender does not automatically provide a payoff letter, you can request one. A payoff letter is a formal document that outlines the payoff amount and provides instructions for making the payment. If your lender is unable to provide this letter, ask for written confirmation of the payoff amount and payment instructions via email or another written format.
Difficulty in making the payment using the provided methods? If you encounter difficulties using the payment methods provided by your lender (e.g., issues with online payment, wire transfer, or mailing a check), contact your lender’s customer service for assistance. They may offer alternative payment methods or help resolve any technical issues you are facing. It’s important to address these issues promptly to avoid any delays in paying off your loan.
The lender does not update the loan status after payment? After making the payoff payment, monitor your loan account to ensure that the payment is processed and the loan status is updated to “paid off.” If the status is not updated within a reasonable time frame, contact your lender to confirm that the payment was received and processed correctly. Keep records of your payment confirmation and any correspondence with your lender.
Ways to find out how much your car is worth
Kelley Blue Book (KBB) should help you determine how much your car is worth.
On their website, you can enter your car’s make, model, year, mileage, and condition to get an estimated market value. KBB provides both trade-in and private party values, giving you a comprehensive understanding of your car’s worth.
Additionally, KBB considers factors such as location and market trends, which can influence the value of your car.
Edmunds offers a similar service to KBB.
You can input your car’s details to receive an estimated market value. Edmunds also provides a True Market Value (TMV) tool, which calculates the average price paid for your car in your area.
This tool takes into account dealer transactions, depreciation costs, and consumer information, giving you a realistic estimate of your car’s value.
Another valuable resource is NADA Guides for finding out your car’s value. Here’s how the National Automobile Dealers Association (NADA) can help:
NADA offers a Consumer Vehicle Values tool that provides accurate and reliable car valuations. You can use this tool to research new and used car book values, trade-in values, ratings, specs, and photos. This makes it easy to get a clear picture of what your car is worth.
To use NADA’s tool, simply enter your car’s details, such as the make, model, year, mileage, and condition. The tool will then provide you with an estimated value based on this information. This helps you understand your car’s market value and make informed decisions when selling or trading in your vehicle.
NADA’s valuations are trusted by car enthusiasts, buyers, and sellers across the USA. They offer a transparent and efficient way to navigate the used car market, ensuring you get the most accurate appraisal for your vehicle.
CARFAX is also a fantastic resource for figuring out your car’s worth.
They offer a tool called History-Based Value that gives you a specific price based on your car’s unique history. This means you get a value that’s tailored to your car’s actual past, not just a generic estimate.
Using CARFAX is super easy. Just enter your VIN or license plate number into their tool, and you’ll get the CARFAX Value. It’s quick and straightforward, making it a breeze to find out what your car is worth.
CARFAX takes into account various factors like accident history, service records, and how the vehicle was used (personal, rental, fleet, etc.) to provide a more accurate valuation. This comprehensive data ensures you get a clear picture of your car’s value.
The best part? The CARFAX Value tool is free to use. Whether you’re looking to sell your car, trade it in, or just curious about its worth, CARFAX provides a clear and accurate valuation without any cost.
What Factors Can Influence Your Car’s Market Value?
Make and Model: The specific make and model of your car can significantly influence its market value. Popular and reliable brands often retain higher values.
Year of Manufacture: Newer cars generally have higher market values compared to older models. However, classic or vintage cars can be exceptions if they are well-maintained and in demand.
Mileage: Lower mileage usually means less wear and tear, which can increase your car’s value. High mileage can decrease the value as it indicates more usage and potential for future repairs.
Overall Condition: The condition of your car, including both the exterior and interior, plays a crucial role. Cars in excellent condition with minimal wear and tear will fetch higher prices.
Service History: A complete and well-documented service history can boost your car’s value. It shows that the car has been regularly maintained and cared for.
Any Other Features or Modifications: Extra features like a sunroof, leather seats, or advanced safety systems can add value to your car. But, some modifications might not appeal to all buyers and could potentially lower the value.
Market Demand and Trends: How does the demand for specific types of cars change? Right now, electric and hybrid cars are in high demand due to environmental awareness and government incentives. Keeping an eye on these trends can help you understand how they might affect your car’s value.
Economic Conditions: How do economic factors impact car values? During tough economic times, the demand for new and used cars might drop, leading to lower market values. Conversely, during economic booms, car values can go up because people are spending more.
Supply Chain Issues: How do supply chain problems affect car values? Recent issues like semiconductor shortages have boosted the demand for used cars, temporarily increasing their value. As these problems get resolved and new car production picks up, the demand for used cars might drop.
Technological Advancements: How does new car tech influence car values? Cars with the latest tech, like self-driving features and advanced safety systems, might be worth more compared to older models without these features. Staying updated on tech trends can help you understand how they might impact your car’s value.
Environmental Regulations: How do changes in environmental laws affect car values? Cars that don’t meet new regulations might see a drop in value, while those that comply could retain or even increase in value. It’s important to stay updated on any regulatory changes that could impact your car’s market value.
How Can You Find Out About Local Market Demand for Your Specific Car Model?
Check Online Marketplaces: Where can you search for your car model in your area? Websites like Autotrader, Cars.com, and Craigslist let you search for your car model locally. By looking at the number of listings and the prices, you can get a sense of how popular your car model is and what buyers are willing to pay.
Visit Dealerships: How can local car dealerships help? Sales reps at local dealerships can give you valuable insights into the demand for your car model. They can tell you how often they get inquiries about your car model and how quickly similar cars are selling.
Use Car Valuation Tools: What tools can provide market values and insights? Tools like Kelley Blue Book, Edmunds, and NADA Guides not only provide market values but also offer insights into market trends and demand. These tools often have features that show how the value of your car model has changed over time and how it compares to other models in the market.
Join Local Car Forums and Groups: How can online forums and social media groups help? Online forums and social media groups for car enthusiasts in your area can be a great resource. Members often share info about buying and selling cars, including which models are in high demand.
Consult Industry Reports: Where can you find data on market trends and demand? Reports from organizations like the Society of Motor Manufacturers and Traders (SMMT) and other automotive industry analysts can provide data on market trends and demand for specific car models.
A Warranty’s Benefits When Selling Your Car With A Loan Still On It
Having a warranty gives buyers peace of mind, knowing they have coverage if something goes wrong. This assurance can make them feel more confident in their purchase, which is a huge selling point, especially for those worried about potential repair costs.
Cars with existing warranties, whether it’s a manufacturer warranty or an extended warranty, often fetch higher prices in the resale market. The added security of warranty coverage makes your car more attractive to potential buyers, allowing you to negotiate a better price.
Many warranties are transferable, meaning the coverage can be passed on to the new owner. This transferability adds value to the car and provides the new owner with continued protection against unforeseen repairs. It’s a major selling point that can set your car apart from others on the market.
There are all kinds of warranties that can affect how much your car is worth. A manufacturer’s warranty typically covers defects and repairs for most car components for a set period or mileage limit. A powertrain warranty covers essential components like the engine and transmission and usually lasts longer than the manufacturer’s warranty. An extended warranty, purchased separately, provides additional coverage beyond what the manufacturer offers and can cover mechanical breakdowns and repairs.
Warranties contribute to long-term ownership satisfaction by protecting against unexpected repair costs. This satisfaction can lead to positive reviews and word-of-mouth recommendations, helping your car get a better resale value.
When you use car valuation tools, you’ll typically get three types of valuations: trade-in value, private sale value, and dealer retail value. Each one gives you a different perspective on what you might get for your car.
Trade-In Value: When you trade in your car for a new one, don’t be surprised if the dealer’s offer is on the low side. They have to keep some profit when they sell your old ride. Plus, they might take off some cash for repairs or any fixes they need to do.
Private Sale Value: A private sale amount is what you can expect to pocket if you sell your car straight to someone else. It’s typically higher than the trade-in value because there’s no middleman involved. However, selling privately can take more time and effort on your part.
Dealer Retail Value: The price set by a dealer typically includes their intended profit margin, along with any additional services or benefits they provide, such as warranties, maintenance plans, and financing options. These perks can add value to the overall purchase, making it worthwhile for some buyers despite the higher initial cost compared to private sales.
Find Out Your Loan Settlement Balance
Once you know your car’s market value, the next step is to get the payoff amount from your lender. This involves calling your lender and asking them to provide the exact amount needed to pay off your loan. You can usually do this over the phone, through their website, or via their mobile app. Make sure you have your loan account number handy when you make this request.
It’s important to understand that the payoff amount can be different from the remaining balance on your loan. The payoff amount includes any interest accrued up to a specific date, whereas the remaining balance does not. The remaining balance is what you owe as of the statement date, but interest continues to accrue daily until the loan is fully paid off. So, the payoff amount will always be higher than the remaining balance.
The payoff amount is typically valid for a few days to a month. Always check with your lender for the exact timeframe to ensure you have enough time to complete the sale. If the payoff amount expires before you find a buyer, you’ll need to request a new payoff amount from your lender. This will give you an updated figure to work with.
Some loans come with prepayment penalties, which are fees for paying off your loan early. While not very common, it’s essential to check your loan terms for any potential penalties. These penalties can vary, but they are usually a percentage of the remaining loan balance or a flat fee. Knowing about these penalties in advance can help you avoid any surprises when you decide to pay off your loan early.
State laws regarding prepayment penalties can vary widely. Some states don’t allow them at all, while others have specific regulations on when and how much lenders can charge. For example, states like Arkansas, Connecticut, Illinois, Indiana, Iowa, Kentucky, Louisiana, Nebraska, Nevada, Oklahoma, Oregon, Rhode Island, and Tennessee allow prepayment penalties. However, It’s always a good idea to check the regulations in your state to know what you’re dealing with.
For example, states like Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming prohibit prepayment penalties for car loans. It’s always a good idea to check the regulations in your state to know what you’re dealing with.
Some states where prepayment penalties are heavily regulated are:
- Illinois: Prepayment penalties are prohibited if the interest rate is over 8%
- North Carolina: Prepayment penalties are not allowed on loan amounts under $150,000
- South Carolina: Prepayment penalties are prohibited on loan amounts under $690,000
- Ohio: Prepayment penalties are prohibited on loan amounts under $110,223
- Texas: Prepayment penalties are prohibited if the APR is over 12%
- Georgia: Prepayment penalties are limited to a maximum of 2% of the loan amount if the loan is paid off within the first year
- Maryland: Prepayment penalties are capped at 2 months’ interest
- Massachusetts: Prepayment penalties are prohibited on loans with terms longer than 3 years
Confirming the Exact Payoff Balance
When you talk to your lender, the first thing you need to do is confirm the exact payoff amount. This is the total amount you need to pay to fully settle your auto loan, including:
- Remaining Principal Balance: The outstanding amount of the original loan.
- Accrued Interest: Interest that has accumulated since your last payment.
- Additional Fees: Any other charges that may apply.
Make sure to specify the date for which you need the payoff amount, as interest accrues daily and can affect the total amount.
Associated Fees
Ask your lender about any associated fees that might come with paying off your auto loan early. These can include:
- Early Repayment Fees (Prepayment Penalties): Charges for paying off your loan before the scheduled end date.
- Administrative Fees: Fees for processing the loan settlement balance.
Knowing these fees upfront will help you avoid any surprises and plan your finances accordingly.
Confirm the process for selling your car with a loan still on it with your lender.
Payment Methods
Ask about the acceptable methods of payment. Some lenders might have specific requirements or preferred method.
- Mobile Transfer
- Wire Transfer
- Online Payment
Payment Address or Account Information
Get the exact address or account information where the payment should be sent so that your payment is directed to the right place and processed promptly.
Additional Considerations
Documentation: After making the final payment, ensure you receive all necessary documentation from your lender, such as a closing statement and proof that the loan has been paid in full.
Request a Payoff Quote: Before selling your car, request a payoff quote from your lender. This will include the exact amount you need to pay and any special instructions.
Final Payment: Follow the lender’s instructions for making the final payment. This may involve using a specific payment method or sending the payment to a particular address.
This way, you’ll know exactly what you’re dealing with and can avoid any surprises. Knowing this information upfront can help you make an informed decision about paying off your loan early.
Planning a Private Sale?
If you’re planning a private sale, ensure you pay off the loan and transfer the title properly. This step is critical to avoid any legal issues down the line.
Local Bank or Credit Union Loan
If your loan is with a local bank or credit union, you’ll likely need to go in person to handle the payoff and title transfer. They can guide you through the process and ensure everything is done correctly.
Online Lender Loan
If your loan is with an online lender, follow their specific process for mailing the payoff amount and getting the title. Each lender will have its own set of instructions, so make sure to follow them closely.
Selling to a Dealership
How to Sell to a Dealership
Selling to a dealership can simplify the process. Dealerships handle the payoff and title transfer for you, making it a hassle-free option. They’ll take care of the paperwork and you can walk away with your new car or cash.
Determine Your Equity
To figure out your equity, subtract the loan payoff amount from your car’s market value. This will tell you whether you have positive or negative equity.
Positive Equity Outcomes
If your car’s value is higher than the loan amount, you have positive equity. This means you’ll get the difference in cash or use it as a down payment on a new car.
Negative Equity
Negative equity occurs when you owe more on the loan than your car is worth. In this case, you’ll need to cover the difference out of pocket.
Positive Equity Example
For example, if your car is worth $13,000 and you owe $8,000, you have $5,000 in positive equity. You can apply this amount toward your next purchase or keep it as cash.
Using Positive Equity
When you sell your car and have positive equity, decide whether to use it as a down payment on a new car or take it in cash. Either way, you’re in a good position.
Negative Equity Situations
Owing More than Car’s Worth
If your loan is higher than your car’s value, you have negative equity. This can be a tricky situation, but there are ways to handle it.
Dealing with Small Differences
If you owe only a small amount more than the car’s value, you might be able to pay the difference out of pocket or negotiate a higher sale price with the buyer.
Example of Negative Equity
Suppose your car is worth $10,000, but you owe $12,000. You’re $2,000 upside down on your loan. This is a common scenario many sellers face.
Options for Covering the Difference
To cover the difference, you can negotiate with the buyer or consider getting a small personal loan. This can help you clear the loan and transfer the title.
Downsides of Personal Loans
Be aware that personal loans often come with higher interest rates and another monthly payment. It’s essential to weigh these factors before deciding.
Final Steps
After Equity and Payoff Determination
With your equity and payoff amount sorted, you’re ready to sell. If you have positive equity, decide how to use it. If not, plan to cover the difference.
Meeting the Buyer
Meet the buyer in a safe, public place, such as a bank. This ensures a secure transaction and a smooth handover of the vehicle.
Negative Equity Scenario
If you have negative equity when selling your car, you’ll need to pay the difference or roll it into a new loan.
Positive Equity Scenario
With positive equity, you can use the extra cash for your next purchase or pocket it as a bonus.
Trading in with a Loan
First Steps in Trading In
When trading in a car with a loan, start by determining the car’s value and loan payoff amount. This sets the stage for a smooth trade-in process.
Positive Equity in a Trade-In
If you have positive equity, use it as a down payment on your next car. This can reduce your new loan amount and monthly payments.
Negative Equity in a Trade-In
Negative equity means you may need to roll the extra amount into the new loan. This increases your loan balance but allows you to move forward.
Example of Financing the Difference
Imagine you owe $2,000 more than the car’s value. The dealership can roll this amount into your new car loan, allowing you to complete the trade-in.
Downsides of Negative Equity in a New Loan
Rolling negative equity into a new loan means higher monthly payments and a larger loan amount. Consider this carefully before proceeding.
Understanding Your Loan Terms
Early Payoff Fees
Check your loan agreement for any fees associated with paying off the loan early. Some loans charge these fees, so it’s crucial to know what to expect.
Bill of Sale Essentials
A bill of sale should include the sale price, vehicle details, buyer and seller information, and signatures. This document protects both parties in the transaction.
Other Options for Negative Equity
If you’re dealing with negative equity, consider refinancing the loan or selling to a dealership that can handle the payoff. These options can simplify the process and help you move forward.
Selling a car with a loan might seem daunting, but with the right steps and information, you can navigate the process smoothly. Whether you’re dealing with positive or negative equity, knowing your options and staying informed will help you make the best decision for your situation.
