Cars.com reports that it is possible to sell a vehicle with an outstanding loan balance to another private owner. However, the loan must be cleared with the lending institution during the process.
Auto Trader recommends first contacting the bank or lending institution to determine how much is still owed on the vehicle. Then, the money taken from the sale of the car can be used to pay off the loan with the bank. When the loan is paid, the title will be turned over and may be given to the new owner. Additionally, an escrow service may be used to facilitate the transaction.