Can I sell a car with outstanding finance? It’s a question many have pondered. First things first; doing so without telling the buyer of the vehicle that the debt isn’t yet paid off is illegal.
Do so, and you’ll be committing fraud. And this goes for cars purchased using outstanding hire purchase (HP) finance and outstanding PCP finance. This is because the lender is the legal owner of the car until that finance is settled.
But if you bought the car with a personal loan, you’re well within your rights to sell it, as you are the legal owner of the vehicle.
Phew, things got pretty serious back there. But if everything is above board and you bought the car with a personal loan, then you’ve come to the right place; here’s the IDEAL guide to selling a financed vehicle.
GET AN ONLINE EVALUATION
As we mentioned in that sometimes snappy, sometimes ominous introduction, if you bought the car with a personal loan, you can sell it, even before you’ve paid off that loan.
That doesn’t mean that selling it is the best option you have; you first need to find out if this is a financially viable, sensible decision. The easiest way to see the bigger picture here is to get an online evaluation so you have an estimate in terms of the current value of your vehicle, the state of your loan repayments, and what you might stand to lose or gain when selling a financed car.
Research and potential costing values should be one of the first things you check before going forward, all in order to avoid a costly sale instead of a profitable one.
BUDGET TO PAY THE SETTLEMENT AS SOON AS YOU SELL
To avoid causing yourself any financial problems, you need to budget to settle your debt as soon as possible so that you don’t end up with more costs at hand. Factor the money you’ll receive for the sale into your loan payments, making sure there’s plenty left over to cover interest, any time you lose and travel costs you accrue conducting the sale, as well as any charges for early repayment of the original personal loan, too.
Then, ready the lump sum to settle that loan the moment you sell your vehicle, to avoid any further interest payments.
DETERMINE THE MARKET VALUE
From a profit and loss perspective, determining the market value of your vehicle is in your best interests, allowing for you to negotiate from a position of strength (or know that you’re coming from one of weakness, and planning accordingly).
No one wants to walk out of a car finance deal with less than they paid in the first place or needing to end up paying more, for that matter, just for the deal to go through. Try and get the best evaluation possible in the market without being scammed into selling at a lesser value than it is worth.
CALCULATE YOUR PROFITS
After calculating your profits, you will at least have a way forward with selling your car, allowing you to plan for your next move, whether it is getting another car immediately or saving up while shopping around for a new or used vehicle that suits your current needs and state of pocket.
MAKE YOUR DECISION
After getting the online evaluation, budgeting to pay your settlement as soon as you sell, determining the market value, and calculating your profits, your decision will be much more transparent and easier to make as all of these factors will contribute towards making an informed one.
This is not an overnight process, and patience is required. That said, there are some obvious advantages; for one, it’s a fairly simple, hands off affair that doesn’t require much of your involvement, since most of the proceedings will be handled by the dealership. What’s more, most financed vehicles are generally still in excellent condition, and when combined with ways to reduce vehicle depreciation, facilitating a sale is straightforward.
As such, if you are on the buying end of things, you are also not getting a run-down vehicle. There is usually positive equity on the car for the buyer, which will make your life easier when you are taking it over. Another thing to consider is to make sure that whatever amount you are selling the car for is not less than whatever you owe, and you are not left with a hefty payment still to give the bank.
*This article is not intended to replace financial advice, but rather, to inform and entertain. For any financial advice, always consult a qualified accountant first*