Yes, you can transfer the title of a financed car, but the process is more complex than with a car you own outright. The primary hurdle is the lienholder—the bank or finance company that technically owns the car until the loan is paid off. You cannot get a clear title while a lien exists. The most common and straightforward path is to pay off the loan balance in full, obtain a lien release from the lender, and then proceed with the title transfer with your local DMV.
The exact steps depend on your specific situation, such as selling the car privately or transferring it to a family member. If you're selling the car, the buyer's payment is typically used to cover the loan payoff. This often requires coordination between you, the buyer, and your lender to ensure the funds are transferred correctly and the title is released directly to the new owner. If the sale price is less than the loan balance (you're "upside-down" on the loan), you will need to cover the difference out-of-pocket before the lender will release the title.
| Key Step | Description | Potential Challenge |
|---|
| Determine Payoff Amount | Contact your lender for the exact amount needed to pay off the loan, which may differ from your current balance. | The payoff amount may include early termination fees. |
| Settle the Lien | Use funds from a sale or personal funds to pay the lender. | If selling, the transaction must be coordinated to ensure the lender receives payment. |
| Obtain Lien Release | The lender will provide official documentation (e.g., a Release of Lien letter) proving the debt is satisfied. | There can be a processing delay of several days or weeks to receive this document. |
| Submit Paperwork to DMV | Submit the title (now with the lien released), the lien release document, a bill of sale, and a title transfer application to your state's DMV. | State-specific forms and fees apply; the process can be time-consuming. |
| Receive New Title | The DMV will issue a new, clean title in the new owner's name, completing the transfer. | The new owner cannot legally register the vehicle until this step is complete. |
It's crucial to follow the legal process. Attempting to transfer a financed car without satisfying the lien constitutes fraud, as you are selling an asset you do not fully own. Always be transparent with potential buyers about the existing loan.
