5 Steps to Sell a Car with a Lien

So you have a car that you still own on. How can you sell it? Well, that is the aim of this post. In this article, we will help you with practical tips and advice that show you how to sell a car with a lien. So read on to find out information about this topic!

What is a lien?

When a car is bought via a loan or through funded from a financial institution or individual, the lender has their name on the certificate as the lienholder.

This means that they have a legal right on the car. A lien is important because it shows an obligation between parties. If the contractual obligation is not fully satisfied, then the lender has the legal justification to seize the car.

When the obligation has been fulfilled, in this case, when the loan has been fully repaid, the lender’s name is blotted out of the title, and the new owner can sell the car after completing several documents.

Now, that is all well and good, if the money has been paid in full. However, this post is aimed at those who want to sell the car before the lienholder has been paid. There are several legal options open to the lienholder so they can transfer ownership to the new buyer. If you are the debtor, there are also avenues open for you to sell the car. We will discuss all of these measures in full.

First steps Before Selling a Car with a Lien

Before arranging for a buyer, there are a couple of steps that you must take.

Step 1. Know the worth of the car

 Know the worth of the car

You should know the cost of the car before you sell it. While it might be easy to get an estimate from a friend or colleague, you might get a better evaluation from an independent party not trying to make you feel better about selling the car. If you are selling to a private party, we advise that you get a quote from a reputable dealership. That way you’ll know the least amount you can sell the car for. Furthermore, if you don’t find a private party to sell to, you can always bring the car back to the dealership.

You can increase the equity in the car by making extra payments.

Step 2. Know how much debt you owe

Do not guess how much you might owe. Instead, try to figure out the exact amount that you still have to pay. By knowing this, you will be able to figure out just how much you need to sell the car if you are looking to make some profit from the deal.

If you discover that due to circumstances you owe more than the worth of the car, it might make it more difficult for you to sell to a private party.

How to Sell a Car with a Lien

After taking the important steps above, it is time to move on to the actual sale of the car.

Step 3. Sell to a dealership

While the fact is that you will make more money by selling to a private party, the stress you will undergo might not be worth it. Selling to a dealership is more straightforward and easier. Most dealerships are aware of such lien deals and are equipped to deal with the complexity of the whole process.

Dealerships are usually equipped to interact well with the financial institution. They will arrange to pay off the lienholder, get the title deed transferred to the dealership, and give you a cut from the transaction.

While dealerships are easier to sell to since they have all the infrastructure in place to facilitate the sale, the biggest disadvantage of using a dealership is that you won’t make as much money.

Step 4. Transfer the debt to the buyer

Transfer the debt to the buyer

Selling to a private party requires extra work on your part. You have to contact your lender to know how much you still have left to pay, you might need to pay off the loan, and you’ll need to remove the lender from the title.

If you cannot afford to pay off the loan before you sell the car, you can transfer the debt to the new buyer. Your lienholder might allow the new buyer to buy the car by paying off the remainder of your loan.

To do this, it would be a good idea to go to the lender’s office with the buyer to finalize and close the sale.

If it isn’t possible to head over to the lender’s offices, then you can set up an escrow account. This service can help to handle all the essential paperwork, confirm the legality of the whole process, and ensure that all the conditions have been satisfied before any money is transferred to a preferred account.

You should note that these services will incur a fee. Hence, you should decide whether to pay the money yourself or split it with the buyer.

Step 5. Be honest

If you are selling a car with a lien, you must let the buyer know as soon as possible. While the buyer might back out of the deal when they hear about this, it would be worse if they later find out deep into the sale. It can lose you the present sale and can even spoil future relationships with others.


Selling a car with a lien might be quite tedious, but it can be done. If you are selling to a private party, you should ensure that the terms of your contract allows you to sell the car to someone else. If so, you should note the process required for making the sale and transferring ownership.

Selling to a dealership is recommended if it is hard to find a private party. The reduced stress might be a price to pay for the lower amount of money you’ll have to sell it for.

We hope that this post has been of immense help in showing you how to sell a car with a lien.