If Your Loan Is Still Outstanding
Even if you have not paid off your loan, you can still sell your car. What you have to do is close the loan to your lending company. To do this you must call them to figure out the best option to close out your loan. Remember, you must ask about receiving a lien release that will state that there are no outstanding loan obligations on your car.
If the balance of your loan is too much to pay off before your car's sale, you can close your loan and transfer ownership of it at the same time. Escrow.com can assist you process payment to the lien holder (the lender) during normal escrow transactions. For more information see www.escrow.com
Otherwise you can do the sale at the lien holding (lending) institution. This option allows you (the seller) to pay off your loan from the sale, and then sign over title to the new owner. You must call the lien holder in advance to arrange for this transaction. If the lien holder is located out of your state you can apply for a temporary operating permit from your state DMV. Once you've paid off your loan you can agree to send the title to the new owner. Of course the new owner (and you) may not feel comfortable with this arrangement. If so, suggest that you also have an interest in paying off the loan as soon as possible and transferring title to the new owner. As long as your name is on the title, you are still liable for your vehicle. With leased cars it is recommended that you transfer your current lease to a new owner by a lease transferring service.