A Guide to Selling Your Financed Car
By Motor Match • 18/12/2023
Are you considering selling your financed car but aren't sure where to start?
Are you considering selling your financed car but aren't sure where to start? The process can be confusing and overwhelming, but it's important to understand your options and obligations as a borrower. Selling a financed car is possible, but there are a few key things you need to keep in mind to ensure a smooth and legal transaction. In this blog post, we'll provide a step-by-step guide on how to sell your financed car and become the legal owner of the vehicle. So, let's get started!
Step 1: Get a Settlement Figure from Your Lender
The first step in selling a financed car is to request a settlement figure from your lender. This figure represents the total amount remaining on the finance agreement, including interest, minus any repayments you have already made. You can contact your finance provider to request this figure, which will be valid for 28 days. Once you have the settlement figure, you can decide how to proceed with the sale.
Step 2: Calculate the Equity in Your Car
If your settlement figure is less than the value of your car, you have positive equity. This means you can sell your car for more than you owe, and the difference will be yours to keep. On the other hand, if your settlement figure is more than the value of your car, you have negative equity. This means you'll need to pay the difference between the sale price and settlement figure before you can transfer ownership of the vehicle.
Step 3: Decide How to Sell Your Car
Once you have the settlement figure and know your equity, you can decide how to sell your car. One option is to sell it privately, but this can be time-consuming and may not generate the best price. Another option is to sell it to a dealership, which can be a faster and easier process. Some dealerships will offer to pay the settlement figure as part of the deal, but be sure to shop around and compare offers before making a decision.
Step 4: Settle Your Agreement and Clear Any Outstanding Finance
Before transferring ownership of the vehicle, it's essential to settle your finance agreement and clear any outstanding finance. Selling a car with outstanding finance is illegal and could result in legal consequences. Once you've sold your car, you can contact your lender to arrange paying off any remaining balance on the finance. This will allow you to become the legal owner of the vehicle and transfer ownership to the buyer.
Step 5: Transfer Ownership of the Vehicle
Once you've settled your finance agreement and cleared any outstanding finance, you can transfer ownership of the vehicle to the buyer. This involves completing the necessary paperwork, including the V5C registration certificate, and ensuring that the buyer understands any outstanding finance that has been settled. It's important to keep copies of any paperwork for your records and to protect yourself in case of any issues down the line.
Selling a financed car can be a complex process, but by following these steps, you can navigate the process and ensure a smooth and legal transaction. Remember to always settle your finance agreement and clear any outstanding finance before selling your car, and to shop around and compare offers from different dealerships to ensure you're getting the best price. By understanding your options and obligations as a borrower, you can successfully sell your financed car and move on to your next vehicle.
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