Is it illegal to sell a car with a loan on it in Canada?

It's not illegal to sell a financed car in Canada, but you must be sure to provide correct information about your car so you don't find yourself in legal trouble. Remember to inform your buyer that there's a lien on the car and contact your lender to let them know you intend to sell a financed car. They can let you know how much is left owing and inform you of the steps you need to take to remove the lien.

I owe money on my car. Is it better to sell it privately or to a dealership?

It depends. You may be able to get a better price selling your car privately, but the outstanding loan on it may make selling the car a real headache and turn private buyers away. To avoid this hassle, you may just want to sell your financed car to an in-person or online dealership.

Help! No one wants to buy my car because of the loan on it.

When placing an ad, if you aren’t upfront about the car having debt on it, then it might look shady when you disclose that information later. You should make it clear to potential buyers that you are committed to repaying the loan. Have a plan ready for how you intend to remove the lien before or during the sale and communicate this well in advance.

How can I show my buyer that I have paid off the lien on my car?

You can go to the bank with your buyer to show them that you have paid off the loan and your lender has removed the lien on your car. You can also show buyers a used vehicle history report showing that the vehicle is free of any debts or liens. Some lenders will also provide a certified letter to show that you've paid off your outstanding debt.

Can buyers tell if a car has any outstanding debt on it?

Yes. Many buyers will require you to show them the title of the car before they buy it, and they'll likely conduct a history check on the car themselves. All they need is the vehicle identification number (VIN), which they can obtain through a simple visual inspection. Your best bet is to be honest during the sale and pay off your lien to avoid legal trouble.

Can you transfer a car loan to another person?

Yes, many lenders in Canada allow you to transfer a car loan to another person. Keep in mind that the person you want to transfer the car loan to will have to meet any eligibility requirements and be approved by the lender. You can learn more about your options for transferring a car loan in our full guide here .