I want to sell my car, but it's still under financing. What should I do?

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Many car owners who purchase their cars through loans may face financial difficulties after some time, making it hard to continue with the payments. However, you may want to sell the car to get a lump sum of money. If they want to sell a car that's still under financing, is it possible, and how can it be done?

When you take out a loan to buy a car, getting the car doesn't mean you own it 100%. In reality, the car remains under the finance company's name until you finish all the payments. Therefore, if you haven't fully paid off the loan and can no longer keep up with the payments, you can't simply decide to sell the car right away because the car still belongs to the finance company.

If you want to sell the car, you need to get approval from the finance company first, which is difficult to obtain. If you go ahead and sell the car without this approval, you could face criminal charges for embezzlement and civil liability if you don't pay off the full amount. The buyer would also be implicated in the wrongdoing.

What should I do to sell a car that's still under financing?

If you still insist on selling a car that's under financing, you should follow the correct procedures to avoid any legal issues. Here are the steps you can take:

Pay off the loan in full with cash before selling

This method is similar to the usual payment process, but you can close the loan faster by paying it off with cash immediately. Once the loan is fully paid, you will own the car 100% and can sell it normally. However, if you can’t come up with the cash to pay off the loan, you might consider selling the car with a down payment instead.

Sell the car for cash and have the buyer pay off the loan

If you can’t pay off the loan yourself, find a buyer who can pay in cash directly to you. This way, you can use the cash to pay off the loan immediately. This method works if the remaining loan amount is not higher than the selling price of the car. If the remaining loan is higher than the selling price, you will still need to cover the difference. However, if the selling price is higher than the remaining balance, you’ll receive the excess amount as well.

Sell the car with a down payment and transfer the loan to the buyer

If the buyer cannot pay in cash, you might choose to sell the car with a down payment and have the buyer take over the loan by transferring the contract with the finance company. However, this method requires approval from the finance company beforehand.

Sell to a car dealership

For those who need to sell a car under financing urgently, selling to a car dealership is another quick option. Most dealerships are partners with various finance companies and can coordinate with them to settle the loan. However, you should be prepared for the fact that the offer from the dealership might be lower than what you had hoped for.

For those looking to sell a car that is still under financing, it is generally required to have made payments for at least 1 year or 12 months before you can proceed with settling the loan. However, it is recommended to contact the finance company before deciding to sell the car to get accurate and complete information.

If you’re planning to sell your car but aren’t sure where to list it, try posting it on Motorist! We’ll help you find buyers and get the best price for your car within 24 hours.

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