How can I sell my car that is under finance?

How can I sell my car that is under finance?

Whether you’re selling your financed vehicle to pay off your debtors or want to upgrade your ride, the process of selling a financed car can sometimes leave you with more questions than answers. Who officially owns the car? How can you legally conduct a sale or trade-in? Who will keep the cash once the sale is concluded? What is the best way to sell your car fast, safely and for the highest price? 

Take a deep breath and read on to learn the answers to these and other relevant questions about selling your car that’s still under finance:

#1 Who owns the financed vehicle?

Few people have the luxury of paying cash for the purchase of a new car. Buying a car is a major financial investment (whether you choose to buy new or second-hand) and requires a fair sum of money. That’s where financial institutions come in handy. You can either pay a small deposit and structure a 5-year monthly repayment plan or put in a sizable lump sum and structure a smaller monthly repayment over a longer period – the options are endless.

This may have been your plan 2 or 5 years ago – but plans change. Life may have thrown you a curveball with a retrenchment or job loss, or perhaps your need for a two-seater sports car has evolved with the upcoming delivery of your first child. Whatever your circumstances, you need to know the outstanding balance on your car and the process required to settle it

Ultimately, during the period of your loan agreement, the car is still under the ownership of the financial institution and they need to be involved and paid out when you choose to sell your car.

A man drives his financed car with confidence

#2 What legal steps should I take when selling my financed car?

Selling a financed car is not as straightforward as parting ways with a vehicle that’s paid off with ownership officially transferred into your name. 

Here are some important steps to take before listing your car for sale or uploading it to an online car-selling website:

  • Should you decide to trade-in your car for an upgrade, the bank will only allow you to conduct this transaction if you can afford the new instalments and settle the outstanding balance on the car that you want to sell.
  • If the vehicle’s trade-in value is less than the settlement price of the financial agreement, you will be required to settle this in cash or through a new loan. Some financial institutions will provide trade assistance. This helps you pay off outstanding fees by adding it to the new loan agreement.
  • You must inform the buyer of your vehicle that it is still under finance before conducting the transaction so that the remaining settlement balance can be paid directly to the financial institution, giving the credit provider a good reason to permit the transaction.
  • Once the settlement amount has been paid, the bank/lender will release the car’s registration certificate to you or directly to the new buyer. 
  • This registration certificate, together with the bill of sale or sale agreement and notice of change of ownership from the credit provider, will allow the new owner to register the vehicle in their name.

Always inform your credit provider when selling a financed car

#3 Where can I get the best deal when selling a financed car?

Landing up in a situation where the resale price of your financed vehicle is less than the outstanding loan balance is not the most favourable outcome. You want to ensure that you get an accurate, fair and market-related valuation of your vehicle (and preferably one that leaves you in the green after concluding the sale).

Here’s how to get the best deal when selling your car:

  1. Avoid private sales. While these transactions involve no middlemen and have the potential to be lucrative, they involve a lot of paperwork, risk and waiting
  2. Opt for a quick, simple and hassle-free online sale. Try an online car-selling website where you can upload your vehicle in less than 2 minutes
  3. Choose a safe, trustworthy platform where you won’t be taken for a ride
  4. Sell your car for more by adopting a few simple DIY hacks
  5. Only sell your financed car on a website that has many positive reviews from people like you. Check out an independent online platform like Hellopeter to find some viable options. 
  6. Get multiple, obligation-free offers upon the upload of your vehicle, allowing you to choose the deal that suits you best.

Now that you have a thorough understanding of the steps involved in selling a financed car, you can make a more informed decision about where to sell your used car for the best price.