How to Sell a Car With a Loan in Florida

Selling a vehicle in Florida with an outstanding loan requires specific financial and administrative steps to ensure a lawful and smooth transfer of ownership. Understanding these requirements helps sellers navigate the transaction efficiently and avoid complications.

Understanding Your Loan and Title Status

Before selling a vehicle with an outstanding loan, understand its current loan and title status. Contact your lienholder, typically a bank or financial institution, to obtain the precise payoff amount for the loan. This figure includes any accrued interest up to a specific date, often called per diem interest, which accounts for daily interest accumulation. Lenders provide a payoff quote detailing the exact amount needed to satisfy the debt and instructions for remittance.

Lien release and title transfer in Florida depend on whether the title is electronic or a physical paper document. Florida uses an Electronic Lien and Title (ELT) system, where most titles with outstanding loans are electronic. This means no physical paper title exists while a lien is recorded. You can check your title’s status (electronic or paper) using the Florida Department of Highway Safety and Motor Vehicles (FLHSMV) online tool, which requires the Vehicle Identification Number (VIN) or title number.

If the title is electronic, the lienholder electronically notifies FLHSMV of the lien satisfaction once the loan is paid off. If a physical paper title exists, the lienholder signs a lien satisfaction form and mails the paper title to the owner once the loan is satisfied.

Preparing for the Transaction

Obtain an official payoff letter from your lender. This letter specifies the exact payoff amount, the per diem rate, and payment instructions. It is crucial for both the seller and buyer, ensuring clarity on the financial obligation for title release.

Prepare a Bill of Sale and an Odometer Disclosure Statement. While a Bill of Sale is not legally mandated in Florida, it is recommended as proof of sale, documenting transaction details like vehicle description, selling price, and parties’ information. The Odometer Disclosure Statement, recording the vehicle’s mileage, is a federal and state requirement for non-exempt vehicles, often on the Florida title certificate. Both seller and buyer must sign and print their names to acknowledge this disclosure.

Arrange for the buyer’s payment to directly satisfy the outstanding loan. The safest method is conducting the transaction at the lienholder’s physical branch, where the buyer can present guaranteed funds (like a cashier’s check or wire transfer) directly to the lender. This ensures immediate loan payoff and lien release. If meeting at a bank is not feasible, a certified check or wire transfer from the buyer directly to your lender can be arranged, ensuring funds clear before ownership transfer.

Completing the Sale and Lien Release

Upon receiving payment from the buyer, remit the exact payoff amount to your lienholder. This payment can be made via a cashier’s check, money order, or electronic wire transfer, often directly from the buyer’s funds, to ensure prompt processing. Fully satisfying the loan triggers the lien release process.

If your title is electronic, the lienholder electronically notifies FLHSMV of the lien satisfaction, making the title lien-free. This electronic release typically occurs within a few business days, though the state system may take an additional 72 hours to update. If a physical paper title exists, the lienholder mails the satisfied paper title to you, which can take several days to a few weeks. For expedited physical titles, an in-person request at a Tax Collector’s office is an option, incurring an additional fee.

Once the lien is released, or if the transaction occurs at a Tax Collector’s office with the lender present, the seller must sign over the title. The seller completes the “Transfer of Title by Seller” section on the certificate, including the buyer’s name and address, selling price, odometer reading, and date of sale. Both seller and buyer must sign the title. If multiple owners exist, all must sign unless names are separated by “OR,” requiring only one signature.

The buyer then takes the signed title, along with a completed Application for Certificate of Title With/Without Registration (Form HSMV 82040), proof of insurance, and identification, to a Florida Tax Collector’s office to complete the title transfer and vehicle registration. This transfer must be completed within 30 days of purchase to avoid late transfer penalty fees.

Post-Sale Responsibilities

After the sale, several final administrative actions are necessary for the seller. A mandatory step in Florida is to remove the license plate from the sold vehicle. License plates remain with the seller and can be transferred to a newly acquired vehicle or surrendered to a motor vehicle service center if no immediate transfer is planned.

Notify your auto insurance company about the sale. This allows you to cancel coverage on the sold vehicle, update your policy, and potentially receive a refund for unused premium. Retain copies of all transaction documents, including the Bill of Sale, Odometer Disclosure Statement, and any lien release confirmations. These documents serve as proof of ownership transfer and are valuable for future reference or in case of disputes.

Florida law requires sellers to file a Notice of Sale (Form HSMV 82050) with FLHSMV. Filing this form removes your registration from the vehicle and helps protect you from civil liability for actions associated with the vehicle after the sale.