Loans, Taxes, Leases: What to Know About Selling Your Car

If you’ve been searching for how to “sell my car” but are left feeling more confused than ever, you can relax; we’ve got your back. When it comes to buying and selling a vehicle, just the paperwork alone can leave you feeling overwhelmed, unsure of where to start and whether you’ve covered all your bases. However, at Newton Chevrolet GMC, we have a team of experts to get you the answers you need.

What exactly is there to know about selling your vehicle? From loans and leases to taxes, when it comes to selling your car, sometimes it is best to leave it to the experts. When you consult with professionals whose jobs revolve around buying and selling vehicles, suddenly, things seem a whole lot easier.

Selling your car feels like a big task, but it doesn’t have to be. Taking things step by step, doing your homework, and talking to professionals will get you through it and on to better things. Whether you’re selling your vehicle for cash or you want to use the money to upgrade your ride, selling your car is easier than you think.

Read on to learn some of the basics you need to look at when it comes to selling your vehicle, dealing with auto loans, handling taxes, and whether it’s even possible to sell your leased car. If you’re still left with questions when we’re through, you shouldn’t hesitate to contact our team to talk to an expert and get all of your questions and concerns taken care of.

Start With the Paperwork

When you first decide to sell your car, you need to think about paperwork. You also have to consider if you own your vehicle, are making payments on a loan, or are leasing the car. If the vehicle is under lease, selling it can be complicated, but is usually possible. If you’re still making payments on the vehicle, you have to pay off the loan before you can sell the car. But if your vehicle is all paid off and you own it free and clear, then you’re good to go!

When getting ready to sell, collect paperwork such as the car title. Whether you sell your vehicle privately or to a dealer, you need a title. If you can’t find your title, you can get a replacement from the Vehicle Services Division of the Tennessee Department of Revenue. A title proves that you are the owner and you have a right to sell the vehicle. When you sell your vehicle, the title will transfer to the new buyer.

Having service records or a vehicle history report is a great way to show potential buyers what condition your vehicle is in. This can include recent oil changes or new tires and whether or not it’s been involved in any accidents. Showing this paperwork to anyone who is planning to buy your vehicle will help them determine a fair price.

Making sure you have as many original documents as possible, like the owner’s manual and warranty information, is also helpful. Having your warranty information will tell you if the warranty is transferable. This can add additional value to your car and make it more appealing to potential buyers. Knowing what paperwork you need before you sell will save you from frustration down the road.

Taxes When Selling Your Car

We looked at some basic paperwork you’ll need when you’re selling your vehicle. But what about taxes? As with anything, taxes seem to complicate a situation like selling a car, but it’s really not as bad as it might seem. When you sell to a dealer, you don’t have to worry as much about small stuff, but when selling on your own, you have to make sure you’ve got your bases covered.

Is there a sales tax? Yes, there is. But the good news is that it’s paid by the buyer when they register the car under their name. So this is something you don’t have to stress over. Then there is the issue of income tax. If you sell a vehicle for more than you bought it for (which is very rare), it’s considered an asset, and you have to pay capital gain tax. But, in most used car sales, you will more than likely sell your car at a loss, which means you sell it for less than you originally paid. In this case, you don’t have to file anything on your taxes.

Keeping track of all bills and records is important so that you know how much has been spent or how much has been made so that you don’t pay more than you have to. Talking to your accountant is the best way to know for sure whether or not you will need to pay taxes and, if so, how much.

What if You Still Have a Car Loan?

Do you want to sell your vehicle but are still paying off your loan for it? Can you even sell a car that has a loan on it? The answer is that while it’s more involved, yes, you can sell a car with a loan on it. However, there will be an extra step involved, as you will have to pay off the lender before you can receive the title and legally sell the vehicle.

If you took out a loan to purchase a car, the vehicle is legally owned by the lender until the loan is paid off in full. Before attempting to sell, contact your lender to find out exactly how much you owe on your vehicle; this can help you plan better. When you talk to your lender, simply request a payoff amount. This will tell you how much you have to pay in order to get the title so you can sell.

Getting an estimate for your car will tell you if your vehicle has equity and can be paid off by selling it or if you’re upside down on your loan. Being upside down on a loan means you owe more than the car is worth, which is not uncommon on newer vehicles that have experienced rapid depreciation. In this case, we can roll the remaining balance of your loan into the loan for your next vehicle, allowing you to sell your car without having to find thousands of dollars on your own.

If all of this seems confusing, visiting our dealership might make things a little easier. Talking to finance specialists who deal with the buying and selling of cars daily will ensure you’re doing the right thing and taking the right steps.

Can You Sell A Leased Car?

If you have a leased car, you might be wondering if you can sell it. Well, yes, you can. But keep in mind that selling a leased car can be even more complicated than selling a car with a loan on it. This is why consulting one of our finance experts or talking to your personal account is important.

Most leases will have a buyout restriction, which can make things complicated. Checking the fine print will tell you whether or not your lease has this third-party restriction. If you’re not sure, talking to our team can help. Many leases use complicated lingo that can be misleading or downright confusing, leaving buyers unsure whether or not it’s possible to sell. Look for terms like “disposition fee,” “termination fee,” or “third-party buyout restrictions” to help you find the answers you’re looking for.

To sell a leased car, you need permission from the entity that officially owns the vehicle. However, by doing this, you might not get the best price, so many owners will instead buy the car outright themselves and then sell it. But if you decide to do this, ensure that you’re going to be getting a good price; otherwise, it’s possible to lose money. Check out your vehicle’s current resale value and compare how much you’d have to buy it for and how much you can realistically sell it for to determine if you can make a profit or not. Sometimes, the risk may be worth it. Other times, not so much, and you could be left with a car you might not want.

Let’s Sell Your Car

Are you ready to sell your car? Great! The easiest way to make it happen is to have all of your paperwork available when you visit us. That includes the title, loan agreement, or lease terms. It also helps to know your vehicle’s value, how much you owe, and whether or not you can actually afford to sell. Talking to the financial experts here at Newton Chevrolet GMC is a great way to ensure you do the best thing for your financial situation and don’t make any unnecessary missteps along the way.