Let’s be clear - selling your car which still has a loan on it is a complicated procedure. Not only does it require an extra effort from your side but also entails the buyer to be a bit more patient. That said, it’s not impossible to pull it off and the key here is to remain diligent throughout the sales process. Take a look at the following guidelines that will help you in selling a car on which you still owe money without any unnecessary hiccup.
1. Estimate the Value of Car
Start with getting a fair estimate of your car’s value. There are a number of ways to do it – you can take the experts’ opinion, help of a dealership executive, refer to classified advertisements, visit a local garage, or browse car selling web portals. The latter is the most convenient method and we suggest you visit gaadi.com for the most accurate estimate of your car’s value. The portal has a network of more than 1600 trusted partners which help you to get a price estimate for your car. Remember, having the right estimate is extremely important and even more crucial in case you are planning to sell a vehicle having a pending loan on it.
2. Loan Payoff Amount
You should contact the lender and inquire about the payoff balance. Remember, the payoff balance will slightly greater than the balance shown on your last statement. This is because interest accrues on the loan amount daily and it keeps on adding to the total outstanding loan amount. Once you get the outstanding amount, compare the estimated value of your car to the balance to be paid off. This comparison will tell whether you’ll gain money out of the deal or need to spend extra to pay off the loan even after selling your car. For example, if the estimated value of your car is Rs 5 lakh and payoff balance is Rs 3 lakh, you can stand to gain Rs 2 lakh from the deal; however, in a scenario where payoff balance is Rs 8 lakh while car is estimated to be worth Rs 6 lakh, you will have to write a cheque of Rs 2 lakh to lender in order to conclude the deal.
3. Lender Involvement
We suggest you involve the lender in the selling process, for they hold the ownership of the vehicle and in a sense are the real owners. Their involvement will also make the whole process genuine and reassure the buyer that there’s nothing fishy or dubious about the deal. You can also ask the lender the best possible way to pay off the loan amount and transfer the ownership to the new buyer in the shortest possible time. Most of the lenders have already had procedures in place to resolve these kinds of situations and they can suggest you the best way to get out of the situation quickly. Take, for instance, facilities like bi-weekly payments or one extra payment that many lenders offer to help borrowers repaying their loan amount quickly. You can also negotiate on the extra charges that you might incur in case you pay off the loan earlier than the pre-decided loan term.
4. Deal in Lender office
It’s recommended to hold the sales process in the lender’s office. The venue provides you with the convenience of completing the entire deal at one place - receiving the money from the buyer, paying off the loan to the lender, and transfers the title of the car new buyer. Not only the lender’s place feels neutral but also lends formal air to the negotiations. Further, you can quickly access any document you require from the lender; thereby reducing the possibility of unnecessary delay in the sales process or you could just visit a trusted used car buyer and get complete loan closure assistance and other documentation support along with the best possible deal for your car.
5. Mode of Payment
Accepting large payments in cash is not recommended. You should insist on getting the full payment in your bank account. Prefer receiving the payments in the form of a bank cheque or a demand draft. Wait for your bank to confirm the receipt of payment and then only proceed with the sales process. Once you get the money, pay off the outstanding loan and get the title transfer to the name of the new buyer.
To make the whole process much simpler for you to sell your financed car, Gaadi offers free loan closure assistance to the customers which is to say that you sell your car absolutely worry free.