Home Articles True or False: Can You Sell a Car with a Title Loan?

True or False: Can You Sell a Car with a Title Loan?


As a result of their credit scores, approximately 53% of Americans have been rejected for a loan, credit card, or car.

When you have poor credit, securing a loan is difficult. If you’re in that financial situation, you might consider taking out a car title loan.

Before you consider using your car title as collateral for a loan, you should know how they work inside and out. Part of that is knowing if you can sell your car with a title loan or check if there are lenders who can buy out your title loan

Keep reading as we explain the answer to: “can you sell a car with a title loan?”

What Is a Car Title Loan?

Otherwise known as auto title loans, a car title loan is a loan wherein a borrower uses their car’s title as collateral in securing a specific amount of money. A car title loan gives you access to cash despite a lower credit score and, in some cases, without credit history at all. 

There are a few requirements in order to get a car title loan. First, you must own your car and be able to present proof of that ownership. You’ll also require car insurance, a driver’s license, and, of course, a car. Other minor requirements may vary from lender to lender and state to state. 

Should you fail to repay the loan, your car is taken by the lender. They’ll sell your car in order to get back some of the money they lent out. Technically, as soon as you sign the car title loan paperwork, the car belongs to the lender under a lien.

Can You Sell a Car With a Title Loan?

The lien the lender places on your vehicle technically gives them ownership. In some states, it gives them security interest. Either way, until you pay off your loan, that lien will not be removed and you’ll be unable to transfer the car to a new owner.

But the answer to “can you sell a car with a title loan?” is actually “yes”. You’ll just have to take a few extra steps and make sure you follow DMV regulations.

Find Out if You Can Buy Out Your Title Loan

How you go about selling a car with a title loan depends on how much you can sell the car for. In the case that you can sell the car for more than what you owe on your loan, then there’s not much to be done. Your lender should be happy to approve the sale of the car because they’re guaranteed to get their money back.

On the other hand, if you have to sell the car for less than what you owe on your loan, you’ll have to figure out how to pay the difference.

Make the Right Disclosures

If you find a buyer for your vehicle, you’ll have to tell them that you’re selling the car with the title loan. Disclosure is extremely important when you want to sell your car with a title loan.

Also, keep in mind that you’ll likely need to complete the sale at the location of your lender. They’ll have to take the lien off of the title once you’ve received the payment and paid off the loan.

More Money & Finance Tips

The answer to “can you sell a car with a title loan?” is a definite yes, but you’ll have some extra hurdles to overcome. You’ll have to find out whether you can pay off your loan with the proceeds of the sale or you’ll need to work out a new repayment program to cover the difference. You’ll also have to ensure that you take the right legal measures, such as disclosing the title loan to the buyer.