What You Need to Know About Selling a Car with Finance Owing
Selling a car with finance owing
If you already own a home, chances are that you didn’t think twice about buying it from someone who still owed a large amount of money on it. Apply this thinking to selling a car which still has finance owed on it – it’s just the same and it’s totally possible.
As long as everything is in place and done properly, selling a car with finance owing shouldn’t give you any problems.
What does it mean if you’re selling a car with finance owing?
This simply means that you’re thinking of selling your car, yet you still have money outstanding on the finance or loan that you used to purchase it in the first place. Millions of people buy used cars in Australia each year, and a large percentage of these are sold with finance owing.
As a seller, how do you reassure your potential buyer?
If you’re selling a car with finance privately, you’ll need to understand that any potential buyer may feel slightly nervous. You can help them out by having all the information and documentation about the finance owing so that they know exactly where they stand. Always be completely upfront about all money owed on the car.
Car loans are actually applied to the car itself rather than the borrower. Car dealers are required to provide proof of a clear title when selling a car subject to finance, yet as a private seller the regulations aren’t as strict. This can make buyers understandably nervous, and you need to reassure them that everything is in place so they won’t face losing the car after the purchase.
Be prepared for lots of questions. Don’t make the buyer feel that they can’t ask about the status of the car and the finance owed on it. Put yourself in their shoes and think about the questions you might want to know.
Paying off your car loan after the car is sold
Generally, most people will use the money from the sale of the car to repay the remainder of the loan. Be aware that many car loans have a fee for paying out early so check with your lender what the situation will be before you agree to the sale. You’ll likely have to pay an admin fee for selling a car with finance privately.
Are you going to buy another car and paying off the finance?
This can be a tricky situation after selling a car with finance privately. You’ll need to be certain that you can afford to buy another car while still paying off the finance from your old car.
Always budget before you buy your next car and work out whether you’ll be stretched financially when you’re potentially paying for two cars at one time.
The money you’ll gain from selling your car subject to finance will help your cash flow but don’t put yourself in a position where you have to miss payments or default on any of your loans. This could really affect your credit history and your chances of borrowing money in the future.
Speak to the experts
Selling a car with finance owing can be a complicated process, which needs to be completed correctly. We can guide you through the steps you need to take to ensure that all parties are happy. We have decades of experience dealing with technicalities such as these and we can help save you time, money and a great deal of stress.
Find out how we can help you with all types of car loans.