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Can I sell my car while it’s still under finance?

Posted on: November 9, 2017 by Tim McClare

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Thanks to the digital revolution, selling your car is easier than ever. But when it’s still under finance, co-ordinating a sale can be trickier than expected. Here’s how to get over the hurdles, sell your car and keep your buyer and lender happy in the process.

What’s the big deal with a financed car?

When you take out a standard car loan, your car is held as security against that loan. That way, if you default, the lender can repossess your car and sell it to recover the outstanding amount. So far, so simple right?

Mmm, not quite. The problem is that the loan is attached to the car itself, not you as the owner. So if the car is transferred from one owner to another, the loan (and any outstanding loan balance) goes with it.

So how do I sell my car?

Long story short – if you still owe money on a secured car loan, you must pay it off in full before you can sell the car. To get the ball rolling, you’ll need to call your lender and confirm how much is outstanding. And remember, if you’re paying out the loan before the end of the loan period, you may also have to pay additional fees like a break fee, a cost-recovery fee and/or an admin fee. Costs differ between lenders so make sure you take everything into account before taking action.

If you don’t have the cash to pay out the loan before you sell the car, you can use some or all of the money from the sale itself. However, you’ll need to square this up with your lender beforehand, so make sure you check with them first.

Be honest with your buyer

Smart prospective buyers will do a public search for your car on the Personal Property Securities Register, so if you have any thoughts about hiding the encumbrance (i.e. the fact that it’s under finance), don’t. Instead, let them know right away the car is under finance, and explain how you’re planning to pay it off. That way, everyone knows where they stand from the very beginning.

Need more help?

If you’re thinking about selling a car you’ve purchased with a loan from Platinum Direct Finance, get in touch. Our expert team can provide you with obligation free advice designed to take the stress out of the sales process, ensuring you and your buyer walk away smiling.

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