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I have ~$10k remaining auto loan at 2.7% interest rate, and I'm about to sell my car (for personal reasons, not related to finance). What's the best way for me financially to deal with that loan:

  • I could just sell it together with the car, e.g. to a dealer, and they'd cut me the check after subtracting the loan from the sell price;
  • I could repay the loan completely and then get the full price from the buyer (is there any benefit compared to previous? I can't think of any)
  • I could pay off the loan with some unsecured balance transfer card and keep it as 0% loan for some time (I'm 100% sure I can repay it before the 0% period ends);
  • any better way?
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  • 2
    Do you have enough cash in the bank to be able to pay off the entire loan today? Are you planning on selling/trading-in to a dealer, or selling to a private party? May 9 '16 at 17:27
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    Don't forget that balance transfers nearly always have a few % up front fee, especially when it's a 0% APR transfer.
    – Joe
    May 9 '16 at 20:22
  • Option 1 is the worst option. The dealer won't give you a "fair" price (remember, they need to still turn a profit on your trade-in!). Option 2 is like Option 1, except you'll get a retail price since you're selling to a retail customer. Your bank doesn't care either way... the only inconvenience is you may have to go to the buyer's bank to get your check. Then you just cash the check, and pay off the remainder of your loan.
    – SnakeDoc
    May 10 '16 at 0:27
  • @BenMiller yes, I have enough money to pay off this loan any time; and probably a dealer, because it is easier and I want to sell it quicker.
    – Max Galkin
    May 10 '16 at 2:34
  • If you want to sell it quick and price is not important, then by all means go to a dealer. You may want to try CarMax.
    – Pete B.
    May 10 '16 at 17:06
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As far as ease of sale transaction goes you'll want to pay off the loan and have the title in your name and in your hand at the time of sale. Selling a car private party is difficult enough, the last thing you want is some administrivia clouding your deal. How you go about paying the remaining balance on the car is really up to you. If you can make that happen on a CC without paying an additional fee, that sounds like a good option.

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    Agreed. You will get less from a buyer that has to deal with that, and the deal might fall through; and, you will get far less from a dealer.
    – Pete B.
    May 9 '16 at 17:29
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    Administrivia is my new favorite quasi-word.
    – Mindwin
    May 9 '16 at 20:14
  • Thanks, that's good to know, but my question is about the loan itself, not about the process of selling the car.
    – Max Galkin
    May 10 '16 at 2:36
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If you actually have the money, as you indicate, you are essentially paying the 2.7% on $10k (=$270 per year) for nothing. That doesn't sound like a good deal, so just pay it off.

After selling it, you'll get some money again, so you can use that for the "original" purpose.

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  • That might have wiped out his Emergency Fund. $270/year might have been a reasonable cost.
    – RonJohn
    Jul 16 at 14:48
  • @RonJohn This could be. (And I missed the fact that the question is about 5 years old.)
    – glglgl
    Jul 16 at 15:21
  • The $270 cost is a good point, whether or not it's 5 years old.
    – RonJohn
    Jul 16 at 15:58
  • Maybe not. It depends on where the OP is keeping that money. If it's in an index fund, it could be a case of paying 2.7% in order to earn 17% - YTD growth of S&P 500.
    – jamesqf
    Jul 16 at 17:50

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