Should you sell your car before the lender repossesses it?

That makes the whole decision a number check. Find out exactly what it takes to close the loan, find out what the car will really bring, and compare the two before the lender acts.

The number that decides it: your payoff

Don't work from the balance on your last statement. The CFPB warns that the payoff can be a different number from what your statement or coupon book shows. Interest math, late charges or other reasons cause the difference.

Call the lender and ask for the payoff amount before you agree to a price.

Then compare it with an actual offer based on the car's condition today, not its value before it broke down:

• Offer above the payoff. The sale clears the loan and you keep the rest.
• Offer below the payoff. The difference stays with you.

Our loan payoff guide walks through the title side of this: who holds it while the loan is open and how the lien gets released once the lender is paid.

How much warning you get depends on where you live

There is no single national rule. The CFPB says a missed payment is enough in many states for the lender to take the car "without a warning or a court order." Others make the lender send a notice first. So don't count on a letter giving you time to arrange a sale. If you are already behind, the window may be shorter than you think.

One group has a federal protection. If you are on active duty, the CFPB says the Servicemember Civil Relief Act bars repossession without a court order on auto loans you took out before your military service began (CFPB). Our deployment guide covers selling a car before you ship out.

When the lender does the selling

If the car is taken, the lender sells it, and you have far less say in how that goes. The CFPB's rules for that sale:

• It has to be fair. Lenders must sell a repossessed car in a "commercially reasonable manner." If you think the price was unreasonable, the CFPB suggests talking to an attorney.
• You get told when. For a public sale the lender must give you the date, time and place so you can bid. For a private sale it must tell you the date after which the car could be sold.
• The pickup isn't free. Lenders generally charge a fee for repossessing the car, and the CFPB says that fee must be reasonable.

Then comes the math. If the car sells for less than the loan balance plus the repossession fees, you may owe the difference. The CFPB calls this a deficiency balance, and its own example is simple: you owe $10,000, the lender sells the car for $7,500, and you owe $2,500 plus any other repossession fees. It works the other way too. In the same loan, if the car sold for $12,000, you would be entitled to the money above what you owe once fees are paid (CFPB).

Don't build your plan around that second outcome. If the sale price falls short, the gap is yours to pay.

If the car has already been taken

It's not always over. The CFPB describes two ways back:

1. Curing or reinstating the loan. In some states you can pay to get the car back by making up the overdue payments plus the repossession costs.
2. Redemption. Whether the sale will be public or private, you may be able to buy the car back before it is sold by paying the full loan amount plus repossession costs.

A few more things to do right away:

• Get your belongings. Arrange a time with the lender to collect anything left inside, and write down what was there and what it was worth.
• Know the line the lender can't cross. If the lender commits a breach of the peace during the repossession, you can contact law enforcement. The CFPB says that may give you a claim for damages, or a defense that reduces what you owe.

What a repossession does to your credit

The CFPB says a repossession can stay on your credit reports for up to seven years and can mean higher insurance rates (CFPB). If the repossession happened by mistake, you can dispute it with the credit reporting companies and ask to have it removed.

That's part of the cost too. When you weigh a sale against waiting, count the seven years, not just the dollars.

What signing the car over takes, state by state

If you do sell first, the lien has to come off before the buyer can get a title. Several states say so directly. Maryland says "A lien must be released before the sale." Nebraska says any lien must be released first. In California and Oregon, the lienholder signs the title along with the seller. Here is what each state's own page or statute says the seller does at the handover.

Ohio adds one wrinkle worth knowing: an electronic Ohio title changes hands on form BMV 3770 instead, a private-sale form that dealers and insurance companies can't use (Ohio BMV).

Fix it, sell it, or let the lender take it

Each path has a cost, so line them up honestly.

Fixing it makes sense only if the repair puts the car back on the road for less than it adds in value, and only if you can still keep up with the payments afterward. A repair bill on top of missed payments often makes the hole deeper. Our guide to repairs that cost more than the car helps with that call.

Selling it works best when an offer covers the payoff, or comes close enough that you can make up the rest. You choose the buyer and you know the price before you sign.

Letting it go hands the timing and the price to the lender's sale, and the repossession itself can sit on your credit for years.

If you're unsure where your car lands, get the payoff figure first and an offer second. With those two numbers side by side, the answer usually picks itself.

Selling a broken car with a loan on it to us

We buy whole non-running and junk cars. You sell the whole car as it sits, with free pickup anywhere in the US. Mention the lender up front. That way the payoff and the lien release are part of the plan from the start.

Questions about your situation? Call (877) 421-6008.

With the car handed over, plates and the sale notice are what remain; after you sell lists each state's version.