Selling your used car can be a heartbreaking and an emotional moment, especially if you are doing it out of need. Though it is easy to sell a used car these days via multiple platforms out there, problems arise when you have to sell a financed car. Since there is a lender in between, selling your used car means that you will have to manage three parties now and keep everyone happy – you, the new buyer and your bank. The basic idea in this scenario is to keep a clear head, and be transparent with both your customer and your bank. Doing this, you would be able to sell a financed car without any major bottlenecks and frustrations.
Every loan, no matter if it’s a housing one or a personal one, comes attached with a lock-in period. This means you cannot end the loan or pre-pay it completely before completing a minimum number of EMIs. Further, most banks will also levy a pre-closure charge / penalty and this should be taken into consideration while selling off a car with a loan on it.
Always spend some time on calculating the exact amount that you need to pay the bank for pre-closing the loan. Next, compare this with the actual value of your used car. Will you be able to get more money than required to close the loan or will you have to put in some from your own pocket?
This will also depend on the depreciation value of your car. In some cases, even if you have a relatively new car, if its demand in the used car market is low, be ready to face heavy depreciation values.
It always makes sense to sell the car only once its market value exceeds that of the pending loan amount. It also makes sense to buy cars with the best resale value in the first place.
If your car is financed, the registration certificate will have a mention of the same. Hence, an important step to sell a financed car is to clear off the loan, obtain a NOC from the particular bank and submit the same at the RTO to get a new registration card with no mention of hypothecation. This activity can take days or even weeks. Hence if you are planning to sell your financed car, do take into consideration these extra days required to clear off the RC.
You can try arranging for the buyer to pay the price of your car directly to the bank on your behalf – this way, you can easily pay the outstanding balance on your loan. However, if the pending loan amount exceeds that of the car’s value, you will have to pay the difference yourself. Doing this, the car will be free of the finance and you will be able to get the NOC from the lender. This would give the new owner of the car a clear ownership without any interference.
Always be open about any outstanding dues on the car whenever you talk to prospective buyers, both individuals and dealers. In case you are selling the car to upgrade to a new one, your used car dealer can arrange for the finance options that repay your present loans and let you have the new one as well. Dealers in fact will be more than happy to do this since they earn from both sides.
Always be thoroughly honest with the buyers about the money that needs to be repaid. Do remember, if your car is in a great state, then the customers will not be put off due to the financing related issues. A good car is always going to bring in interest from the prospective buyers, thus a little honesty goes a long way. A good car, with low mileage, and in a top notch condition, is still a deal buyers would want to invest into.
In case you want to sell a financed car without all these hassles, leave it all on to us at CARS24. We buy any car including that under a loan. Get in touch with us and we will make sure you not only get the best quote in 30 minutes, but we also take care of all the paper formalities on your behalf.