Whether it’s time to trade up or down, or just on-sell your car, having finance owing on it doesn’t have to mean a roadblock to your plans. Before you put it up for sale, though, make sure you know the following ins and outs of selling a car with finance still owing on it.
How big is your outstanding balance?
Find out from the lender how much money you have left owing on your car loan. Often, it can be hard to keep track of what the balance actually is – you just make your payments as they are due and know the loan will eventually be paid off. But depending on how far through the loan repayments you are, you could be pleasantly surprised.
If it’s a small amount, you may decide to either pay it off now or just wait until the loan is repaid, to save any potential headaches. However, make sure you know the actual amount to repay, as well as the balance – they might be different if there is accrued interest or a repayment fee to factor in.
And of course, if the balance outstanding means that waiting to pay it off doesn’t make sense, there are other steps you can take.
Selling a car with finance owing on it
Perhaps the loan you took out to buy your vehicle isn’t actually secured against the vehicle anyway, or maybe it’s secured against something else. In this case, selling the car is relatively simple, you can sell it like any other item you own that is finance free.
However, if the lender has used your car as security, there are some steps you will need to take before you can sell the vehicle.
If you’re trying to sell privately, you will need to tell the potential purchaser that there is money owing on it. With money owing, the lender retains the right to take the car back if you stop paying your loan – which is a big risk for a potential buyer.
In this situation, the buyer might want to pay the lender directly so there is no risk of this, or the lender may not agree to you transferring the car to someone else’s name if you repay the loan.
Trying to sell your vehicle to another person or a car yard can be challenging when money is still owed, and the car is being used as security.
However, if you want to upgrade your vehicle, you may not actually need to sell it. Depending on the balance owing, you may be able to trade your vehicle in for the next vehicle of your dreams and transfer the loan to a new vehicle.
Keep in mind that this will (most likely) result in you having a bigger car loan, and maybe bigger repayments (or a longer repayment term than what you have left), but in some cases, it might also be the best way for you to achieve what you want.
Struggling to meet your payments?
If you’re struggling to meet your payments, and selling your car gives you the way to get rid of the debt, consider having a chat with your lender first. They might have options that will allow you to get back on top of your payments, while still keeping your vehicle.
Get in touch with our Team to get started. We can help understand your circumstances and approach selling your car with all the facts.