Owing money on a motorcycle loan doesn’t mean you can’t sell your bike. First, you’ll need to pay off your loan, which can be tricky if you don’t have cash to cover the balance. You still have some options. You could lose money, however, depending on how much you owe compared to the sale price of your bike.
Sales of Vehicles with Liens
When you finance the purchase of a car or motorcycle, your lender holds on to the vehicle’s title until the loan is paid off. This is also the case when you take out a title loan. When a third party holds your title, your motorcycle is said to have a lien on it. This lien allows your lender to repossess your bike if you stop making payments.
Removing the Lien
You won’t be able to sell your motorcycle until the lien is removed, so your first step should be finding out how much you owe on your loan. You may be able to determine your remaining loan balance from a loan statement, but calling your lender directly is the best way to be sure you have the right number.
Paying Off Your Motorcycle
You can remove the lien and clear your bike’s title by paying off the financing. Doing this with your own money is the simplest thing to do, but many people are not in a position to come up with the loan balance in a lump sum. If you have a co-signer, that person may be able to pay off the loan. Another option is to get your buyer to pay you up front, before you hand over the title. Then you can pay off the loan with your buyer’s money. Another option is to work with the lender to conclude the sale. You may be able to complete the sale at the bank or credit union that holds the lien and have the title signed over on the spot.
Selling to a Dealer
Many dealerships are prepared to take care of the paperwork associated with a vehicle lien. The only drawback in this case is that you may not get the same price for your motorcycle as you would from a private buyer.
Upside-Down Motorcycle Loans
Owing more on your loan than your motorcycle is worth is known as having negative equity or being upside down on the loan. This often happens with vehicles that have been in an accident or suffered other damage. Experts recommend holding on to your bike in this case until you pay off the loan and gain back some equity. If you do sell it, you’ll have to come up with the cash to cover the negative balance on your loan.
- Clean your motorcycle before you try to sell it. A simple wash and polish can make your motorcycle appear much more enticing to a potential owner and bring you a higher sales price.
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.