Tips on How To Sell A Financed Car

If you’re planning to sell a car that is on loan, it’s natural to worry about  getting  it done in a hassle-free manner. However, if you plan it right and know and follow the rules, half your battle’s won.

Since we understand the process of selling financed cars, we decided to do the legwork for you and create a guide that will walk you through the process of selling your financed vehicle without breaking a sweat!

Whether you want to upgrade to a new ride or simply sell your existing one, here’s how you can go about it.

What documents do I need to sell my financed car?

Here are the documents you need to sell your financed vehicle in India:

Category	Document	Number of Copies Required
Individual Documents	PAN Card	One Self-Attested Copy
	Address Proof	One Self-Attested Copy
	Passport Size Photographs	Two Self-Attested Copies
RTO Documents	Form 28	Three Copies With Chassis Imprint
	Form 29	Two Copies
	Form 30	Two Copies
	Form 35 and NOC	One Copy With Bank Stamp On Form 35
	Sale Affidavit	One Copy
	Clearance Certificate	One Copy
Car Documents	RC	Mandatory
	PUC	Mandatory
	Insurance	Mandatory
	Application Of Insurance Transfer	Only required if insurance is to be transferred to the buyer
	Invoice Of The Car	Only required if there is a mismatch in the RC details
	Ownership Manual	-
	Duplicate Car Keys	-

Getting started with selling a financed car

Here’s how you can get started:

Clearing the loan and getting an NOC from the bank

When you purchase a car on loan, your car’s registration certificate contains the term ‘HP’ that stands for hypothecation. This means that the bank has complete ownership of the vehicle till you clear the loan. 

To sell your car, you need to get an NOC from the bank. You need two copies of Form 35, the original RC, a self-attested photocopy of the PAN card, the PUC certificate, and a copy of the car insurance to complete this process. Once you have your documents ready, visit the bank and clear the loan dues (payoff amount) and submit all necessary documents.

Now, it is important to note that banks have varying time limits for issuing an NOC. Here’s how long it can take in some of the popular banks across India:

Bank Name	Expected Time For NOC (Working Days)
HDFC BANK	4-7 days
ICICI BANK	9-10 days
KOTAK MAHINDRA BANK	5-7 days
SUNDARAM FINANCE	18-25 days
INDUSIND	7-15 days
SBI	3-5 days

Short on cash to clear the loan? 

If you find yourself short on cash to clear the loan for your financed car, there are several options you can consider:

The first is where, if you are unable to pay the pending loan on the car, you can talk to the bank to seize your car. In this case, the bank conducts an auction to sell it. However, you might face a couple of challenges:

• Since the car is auctioned through the bank, it might be sold for a lower value and you might not be able to earn any extra buck on it since the final amount would be just enough to close the loan.
• Secondly, it might even go for a lower value than your pending loan amount wherein you will have to pay the remaining sum to clear the loan with the bank.

You can also find buyers through trusted used car marketplaces like CARS24 to sell your car. This helps sell your car in a hassle-free manner, transfer its ownership, and ultimately, clear your loan through the sale.

Bottom Line

Selling a financed car may seem like a challenging task, but with the right knowledge and preparation, you can navigate the process smoothly. By following the necessary steps and ensuring you have all the required documents, you can sell your financed vehicle without any hassle. Remember to obtain an NOC from your bank after clearing the loan and explore various options if you're short on cash to clear the loan amount. 

Remember, reputed used car marketplaces like CARS24 provide a convenient platform to sell your car by providing the right guidance. So, you can successfully sell your financed car and move on to your next automotive adventure.

FAQs

Q, Can I sell my car which is on EMI? 

Yes, you can sell a car that is on EMI. However, there are certain considerations to keep in mind. Firstly, you need to inform the financing institution or lender about your intention to sell the car. They will provide you with the necessary documents required for the sale, such as a no objection certificate (NOC) or an authorization letter. Additionally, you will need to settle the outstanding loan amount with the lender using the proceeds from the car sale. It's important to follow the proper legal procedures and ensure that the ownership is transferred to the buyer only after the loan is cleared.

Q. Can we transfer car EMI to another person? 

Car EMI transfer to another person is not a common practice. When you take a car loan, the loan agreement is typically tied to your name and financial profile. Transferring the EMI responsibility to another person would require the lender's consent and a thorough evaluation of the creditworthiness of the new borrower. It's best to consult with your lender directly to understand their policies and explore any possible options for transferring the EMI to another person.

Q. How can I sell my car without paying a loan?

Selling a car without paying off the loan can be a complex process. Generally, the loan needs to be settled before transferring ownership to the buyer. One option is to use the proceeds from the car sale to clear the outstanding loan amount with your lender. Alternatively, you can explore options such as refinancing or taking a personal loan to clear the car loan before selling the vehicle. It's important to communicate with your lender and follow the necessary legal procedures to avoid any legal or financial complications.

Q. What is the meaning of hypothecation? 

Hypothecation refers to the practice of using an asset, such as a car or any movable property, as collateral for a loan. In the context of car financing, when you take a loan to purchase a vehicle, the car acts as collateral for the loan. The lender retains the right of hypothecation, which means they have a legal claim on the vehicle until the loan is fully repaid. Once the loan is paid off, the hypothecation is removed, and the borrower becomes the sole owner of the vehicle.