Cars can be a little expensive, and many cost anywhere from a few grand to thousands of hundreds of dollars. In case you don’t have this cash, getting a car loan may help you to jet off in a new car affordably and quickly. However, unfortunately, having a car loan may make things more tricky when it comes to selling your car because you have to completely pay it off. In case you have decided that it is time to sell your car, but you have not paid off the loan yet, you will need to know how you can still sell your car which is under finance. Here is a detailed guide!
What is a Car Under Finance?
A car under finance is a car which was purchased with borrowed money. Generally, it means you took a car loan from a financial institution before you purchased that car. When you see ads on cars featuring a lower interest rate for a few years, the company has actually advertised their car financing product, not just the car.
When it comes to selling a car under finance, the best approach is to use the money you get from the sale to pay off the loan. But, because of the peculiarities of the car loan, it may get more complicated.
Is it Illegal to Sell a Car Under Finance?
Well, it is not illegal to sell your car under finance. However, the process can be a little tough. Since your car is under finance, you would be selling something you actually don’t own. That means you have to ensure that you know exactly what you are doing. If you are looking to sell your car still under finance, here are a few basics you need to know.
There are certain complications while selling a car under finance, however it is legal to sell your car. Many lenders won’t find it a problem selling your car under finance, but they would request that you pay off the remaining amount of loan once you get the funds.
For instance, let’s assume that you are selling your car purchased for $30,000 some years later for $18,000. You may expect to take some amount of money to pay off your balance of $5000 still owing on the loan.
Depending on the terms of your car loan and the lender, you may have to pay an early repayment fee or break fee while paying off your balance. Make sure you read over the contract or ask the lender in case you are unsure.
Should You Sell a Car Under Finance?
Just because your car is still under finance, it never means you will not be able to sell it. In case it is a great deal, and you reassure the buyer, there would be a lot of people wanting to do the deal. When you get one, ensure to follow all the instructions from the lender, and keep the record of all the documents you require, including the evidence of buying papers and transfer of ownership.