Can You Sell Your Car While On Finance

Can You Sell Your Car While On Finance

6 min read Jun 29, 2024

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Can You Sell Your Car While On Finance

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Can You Sell Your Car While On Finance?

It's a common question, especially for those looking to upgrade their vehicle or manage their finances. The answer is yes, you can sell your car while on finance, but it's not always straightforward. Let's break down the process and the factors to consider:

Understanding Car Finance

When you finance a car, you're essentially borrowing money from a lender (usually a bank or finance company) to purchase the vehicle. You then make regular payments over a set period of time, gradually paying off the loan. The lender holds the title to the car until the loan is fully repaid.

Selling Your Financed Car: The Options

There are two primary ways you can sell a car while on finance:

1. Sell to a Dealership:

  • Trade-in: This is the most common option. You trade your car in as part of a new car purchase. The dealership will assess the value of your car and factor it into the price of the new vehicle. This can be convenient, but the dealership may offer a lower trade-in price than what you could get selling privately.
  • Sell directly: Some dealerships may be willing to buy your financed car directly, even if you don't purchase a new vehicle from them. You'll need to negotiate the price and settle any remaining loan balance with the lender.

2. Sell Privately:

  • Finding a buyer: You'll need to advertise your car and find a buyer. Websites like AutoTrader and Craigslist are good starting points.
  • Negotiating the price: The price you can command will depend on the car's condition, mileage, and market value.
  • Settling with the lender: Once you have a buyer, you'll need to inform your lender and settle the remaining loan balance. This usually involves:
    • Paying off the remaining balance: You'll need to pay the lender the remaining amount owed on the loan.
    • Releasing the title: Once the balance is paid, the lender will release the title to the car, allowing you to transfer ownership to the buyer.

Factors to Consider

  • Loan terms: Check your loan agreement to understand the terms surrounding selling the car. Some loans may have clauses restricting you from selling the vehicle without lender permission.
  • Remaining balance: The amount you owe on the loan will heavily influence the price you can get for the car.
  • Equity: Equity is the difference between the car's value and the outstanding loan balance. If you have negative equity (you owe more than the car is worth), you might need to pay the difference to release the title.
  • Fees: There might be fees associated with early loan repayment or title transfer.

Important Notes:

  • Transparency is key: Inform potential buyers that the car is financed and that they'll need to work with the lender for title transfer.
  • Be prepared for negative equity: If you owe more than the car is worth, you might need to consider paying off the difference or negotiating with the lender.
  • Seek professional advice: If you're unsure about the process or have complex loan terms, consult with a financial advisor or a car finance specialist.

Selling a car while on finance can be done successfully, but it requires careful planning and understanding of the process involved. By considering these factors and navigating the steps carefully, you can sell your car and manage your finances effectively.

Can You Sell Your Car While On Finance

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