The steps
- Get a 10-day payoff quote from your lender. It includes interest through the payoff date, so it’s higher than your statement balance.
- Get an offer for the car.
- Do the math: offer minus payoff = your equity.
- Pay off the loan (or have the buyer pay the lender directly, if they offer that).
- Get the lien release so the title can transfer. Lenders can take several business days.
Positive vs negative equity
Positive equity: the offer is more than you owe. The loan is paid and you keep the difference.
Negative equity (“underwater”): you owe more than the car is worth. You’ll need to cover the gap before the title can transfer, from savings, or a personal loan. Rolling it into a new car loan is possible at a dealer but makes the next loan bigger.
Large retailers like CarMax and Carvana pay lenders directly. If you’re using an instant-offer service, ask how they handle liens before you schedule pickup.
Questions
Why can’t I just use my statement balance?
Interest accrues daily. The payoff quote is the exact amount to close the loan on a specific date.
How long does the lien release take?
It depends on the lender and state, often several business days. Electronic-title states can be faster.
- Edmunds: How to sell a car with a loan: www.edmunds.com/sell-car/how-to-sell-a-car-with-a-loan.html
- Experian: Selling a car that isn’t paid off: www.experian.com/blogs/ask-experian/sell-car-if-it-isnt-paid-off/
This guide is general information, not legal advice. Rules change; confirm with your state DMV before you sign.