If you want to sell your car, the names listed on the title determine who has a say in what happens to it. You might be the one driving the vehicle, but you may not completely own it by yourself! Here are some basics for understanding how transferring ownership works when it comes to cars.
Selling Your Vehicle
When you want to sell your vehicle, take a look at your title. Whose names are listed on it? If you find anything else besides your name, you’ve got a few steps to take before you can trade it in to a dealer, or sell it to someone else.
Not to worry, we’ve got three different common scenarios that drivers find themselves when they want to sell their car:
1) Your Name Only
If your name is the only one listed on the title, you’re the sole owner of the vehicle. You can simply sign the title over to the new buyer, whether that be a dealership or an individual. You and the buyer must sign the title, and you may be required to document the mileage at the time of sale, too.
If there’s only one name on the car’s title, but it isn’t yours, it’s another thing entirely. Usually, this means that either a family member, spouse, or friend has the vehicle registered in their name.
To sell the car, the person with their name on the title is the only one that can transfer ownership. If you don’t know the person whose name is on it, then you may be a victim of title jumping.
2) Your Name and a Lender
When you finance a vehicle, your name is listed on the title, but so is the lender’s. This is called having a lien on the car, and the lender is the lienholder. Until you completely pay off the loan, the lender has the right to repossess the vehicle if you default. You don’t officially own a financed car until the loan is paid off.
Once you complete your auto loan, you typically receive a release of lien letter from the lender, or you go to the lender and request one. With this, you can go to the Department of Motor Vehicles or Secretary of State and remove the lien from the title. After the lien is removed, you’re the sole owner of the car. The lender no longer has any rights to the vehicle because you paid off the loan – great!
If you need to sell the car before the loan is paid off, it takes a few more steps, but it’s nothing to worry about. When you get a check from an individual or dealer, you use it to pay off your loan balance. Once that’s done, you receive a release of lien letter and the ownership can be transferred to the buyer.
Anything that’s left over after paying off the balance on your loan is yours to keep. However, if you don't sell your vehicle for enough to cover your entire loan balance, then you must pay the difference yourself to remove the lien from the title.
3) Your Name and a Co-Borrower
When you enlist a co-borrower’s help to get into an auto loan, both of your names are listed on the title. Most of the time, co-borrowers are spouses or domestic partners.
To sell a car with a co-borrower, both of you need to sign the title to transfer ownership to a buyer. There are some instances where only one of you needs to sign it, but this is rare. It’s when there’s a modifier between your names on the title that says “and/or,” which means both of you can sign it, or only one needs to. However, this varies by state, so check your home state’s rules and regulations before you assume anything.
If you have a lien on the title and a co-borrower, simply ask the lender the amount you need to complete your loan, and pay the balance off. Once you get the release of lien letter from the lender, you and the co-borrower can sign the title and transfer ownership.
Ready to Upgrade?
When you’re preparing to sell your current vehicle for another, it can be tough to know where to go, especially if you have less than perfect credit. Bad credit borrowers can run into issues finding a dealership with the lending resources they need. There are dealers that work with bad credit lenders but you have to know where to look.
You don’t have to look if you start right here with us at Auto Credit Express. We have a coast-to-coast network of dealerships that have bad credit lending resources, and we want to look for one in your area, at no cost. To begin, fill out our auto loan request form. There’s never an obligation to buy a thing, so what are you waiting for?
