Can You Sell Your Car On Finance

Can You Sell Your Car On Finance

6 min read Jun 29, 2024
Can You Sell Your Car On Finance

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Can You Sell Your Car on Finance?

Selling a car that's still on finance can feel tricky. You might be worried about breaking the loan agreement or dealing with the finance company. But, it's definitely possible to sell your financed car, and it's often easier than you think.

Here's a breakdown of the process and what you need to consider:

Understanding Your Loan Agreement

The first step is to review your loan agreement. This document will outline the terms and conditions of your loan, including:

  • Outstanding balance: How much money you still owe on the car.
  • Early repayment penalties: Some lenders charge a fee if you repay the loan early.
  • Release of equity: This refers to the difference between the car's market value and the outstanding loan balance.

Methods to Sell Your Financed Car

Here are the common ways to sell a car that's still financed:

1. Sell to a Dealership:

  • Pros: This can be a quick and hassle-free option, as dealerships often handle all the paperwork and finance settlements.
  • Cons: Dealerships might offer you less than the market value for your car.

2. Sell to a Private Buyer:

  • Pros: You might be able to get a better price for your car by selling it privately.
  • Cons: You'll need to handle all the paperwork and negotiations yourself.

3. Trade-in:

  • Pros: This is a simple option if you're buying a new car, as the dealership will handle the financing and trade-in process.
  • Cons: Dealerships often offer less for trade-ins than the market value.

4. Sell to a Finance Company:

  • Pros: If you're struggling to repay your loan, some finance companies will buy back the car.
  • Cons: This is usually a last resort, as you'll likely lose money on the sale.

Important Considerations:

  • Get the Finance Company's Permission: It's vital to contact your finance company before selling your car. They'll provide guidance on how to proceed and ensure you meet the terms of your loan agreement.
  • Settle the Outstanding Balance: You'll need to settle the outstanding balance on the loan before the car can be transferred to the new owner.
  • Pay any Early Repayment Fees: Be prepared to pay any applicable early repayment fees.
  • Ensure Clear Title: The finance company will need to provide you with a clear title to the car before you can sell it.

Can You Sell Your Car for More Than You Owe?

If your car's market value is higher than the outstanding loan balance, you'll have positive equity. This means you'll receive money after settling the loan.

If your car's market value is less than the outstanding balance, you'll have negative equity. This means you'll need to pay the difference to the finance company.

Tips for Success:

  • Research market value: Use online tools and compare prices of similar cars to get a good understanding of your car's value.
  • Be transparent with buyers: Inform them that the car is financed and that you need to settle the loan before the car can be transferred.
  • Get everything in writing: Ensure you have a written agreement with the buyer and the finance company outlining the terms of the sale.

Selling a car on finance can be a straightforward process if you understand the requirements and work closely with your finance company. By following these steps and tips, you can sell your car successfully and move on to your next ride.

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