If the lender is not local, you’ll need to bring the bill of sale on the car to your state Department of Motor Vehicles. You’ll want to obtain a temporary operating permit for the buyer. This will allow you to transfer the vehicle to the buyer, and then to deliver clear title to the buyer once the loan has been paid.
Obviously, you will not have the title until the loan is paid off in full, so there will be a delay of several days while that process is completed. You may have to pay a fee to your lender to expedite the title, a process that ordinarily takes several weeks. The risk of this delay will be a problem primarily for the buyer, since he or she will have a vehicle without having the legal title.
You can never afford to be casual about this part of the sales process! You are almost certainly selling the vehicle to a person you don’t know. This can include someone with less than honorable intentions, including someone who is fully prepared to commit outright fraud. Though you should always hope for the best, you need to prepare for the worst.
However, there is no easier way to complete the sale, unless you have the personal funds to pay off the car loan prior to the sale of the car
First rule, never accept a personal check from the buyer whether for full or partial payment of the sale price. A personal check can bounce, in which case the buyer will have both the cash and your car in his or her possession. It’s even possible that the buyer can pass a check that is entirely fraudulent, such as one drawn on the account of an unknowing third party.
For that reason, you should accept only cash or a bank check for payment. A bank check or cashier’s check is issued by the bank itself. To be extra careful, insist on going to the bank with the buyer to get the official check so you know it’s legit – there are Craigslist scams in which buyers pass counterfeit bank checks that are impossible to detect until they bounce.
This may be inconvenient and even a bit embarrassing but better to swallow that bitter pill upfront than deal with cleaning up a certified mess later on.
Wrapping up legal matters
The legal side of selling a car is not quite as simple as most people would like it to be. If you’re planning to sell your car, get a list of the specific requirements in your state from the Department of Motor Vehicles. And be sure to follow 
those requirements to the letter.
- Bill of Sale. This is a simple document that will spell out the parties to the transaction, as well as the specific details, including date, price, and a description of the property being transferred. It should include the vehicle identification number of the car being sold, as well as the odometer reading as of the date of sale.
- Release of Liability. You can usually download these forms from the DMV website in your state. It will confirm the transfer of the vehicle, and release you, the seller, from future liability. The form should include the odometer reading, and be filed with the DMV immediately so there is an official record of the transfer.
- Cancel your insurance coverage on the car. And while you’re at it, require that the buyer provide proof of insurance coverage on the car as well. This will make it clear that the buyer is assuming responsibility for the vehicle.