How to Easily Sell a Financed Car? Know in Detail
You might find it snowing under while finding buyers for your car with a loan. There can be a complex process for selling your car, but it has ample solutions. And you can choose the most appropriate way according to your situation. Since 42% of Canadians prefer a used car over a new car in 2023.
Know all about the ways and procedures to sell a financed car and get answers to your most asked questions.
Legitimate Ways to Sell Your Car in Canada
Despite having a loan balance, you can go for proven and best ways to sell your car. Find the sellers through the following appropriate options:
Selling Your Car Privately
The choice of selling your car privately comes with both large endeavors and high returns. You can avoid the penny-pinched buyers with your extra efforts. Different roles you have to get in to sell your financed car:
- Non-Staining, repairing, and polishing your car
- Clicking impressive pictures
- Sharing it on listing
- Promote and advertise
- Meetups with potential purchasers
- Drive testing
Besides the benefits, it comes with a hindrance. That means no seller wants to indulge in the time-consuming and complex procedures of buying a financed car since complicated processes are involved for both parties while closing a deal for a car under loan term.
Selling a car to the dealership
Selling a car to the dealership is often a good option because it is a quicker and easier way. The dealership usually gives you a fair price for your car, and you do not have to worry about advertising or the negotiation process.
Additionally, you can use the money from the sale towards a new car purchase.
Sell financed car to a dealership:
- Take your vehicle to the dealership.
- Estimate the value of.
- Choose from the two options: Whether you need cash for the financed car or use it as a trade-in.
- In case of an outstanding balance on the car. The dealer will find a solution to sort it.
Note: If you go for the option of trade-in, chances are it will be worth less than the true market value since dealers consider the cost they have to incur to revamp and resell your car. Make sure you are selling at a fair price by enquiring about the value of the car through valuation tools.
Selling a Financed Car to an Online Retailer
Closing a deal for your financed car through an online retailer is an absolute online process and the most authentic way. Online retailers contact you through the car details you provide online.
In case of your outstanding car loan, the retailer can arrange for your lender to cover the cost of the financed car and then send you the details.
Retailers give you the highest returns than a traditional dealership. How?
The reason is the operation of online retailers in Canada is at the National level. They have a wide reach of potential customers and other favorable situations of top-notch digital presence and ease of distribution. Altogether their business model operates on a large scale.
Selling a Vehicle with a Lien
The simplest way to sell a vehicle with a lien is through the sale at an Auto Dealership. The car would be a trade-in. This way, the direct deal is closed between the dealer and the lien holder. The dealer facilitates the loan payment for the vehicle.
However, the impediment is less payment for trade-in vehicles than selling the car privately.
“Money doesn’t buy happiness, but it buys cars.”
Procedure to Sell a car and Pay off Your Loan
Know the Worth of Your Car
Know the appropriate market valuation for your car. And you can check valuation through Canadian Black Book, Kelley’s Blue Book, and CARFAX’s Value Range Estimator.
Research the car’s fair market value through private and dealership listings and set a competitive price with similar cars on the market.
- Identify the Payoff Amount of Your Vehicle
Before attempting to sell your financed car, review your loan documents. Determine how much you owe on the loan, including any applicable prepayment penalties.
Check whether you have positive or negative equity in the car. Have clarity on the amount owing on your financed car. You need to enquire about a “payoff amount,” which is also known as a “payoff letter” or “payoff balance”, to check the amount you are charged.
Reimburse the Car Loan
Pay your car loan amount to sell it at ease and higher prices. You will receive excellent returns in the private marketplace if you have a title. You can also choose the way of a low-interest personal loan to clear the loan balance.
Find a Buyer
It is simpler to locate a purchaser for a car with no outstanding debt. You will have to show the required documentation after the sale process gets done. You can obtain a report of your vehicle history from the company. That will be proof of no remaining loan for the vehicle. You can try selling it privately or to a dealership.
Difference Between Positive Equity and Negative Equity
|Positive equity occurs when your car’s value is higher than your loan’s balance. This happens when the value of your car has increased since you purchased it or if you paid more than the current market value when you bought it.||Negative equity occurs when your loan balance is higher than your car’s value. This happens when the value of your car has decreased since you purchased it or if you paid less than the current market value when you bought it.|
|For example, if you owe $20,000 on a car worth $25,000, you have $5,000 in positive equity.||For example, if you owe $25,000 on a car worth $20,000, you have $5,000 in negative equity.|
Private Car Sale Payment Options
Direct Bank Transfer
When selling a financed car, the seller can accept payment via direct bank transfer. To accept payment via direct bank transfer, the seller must provide the buyer with their bank details, and the buyer must initiate the transfer from their bank.
The seller should also ensure that the buyer has provided the correct details for the transfer; any errors could lead to the money never arriving in the seller’s account.
The cash method of selling a financed car is often the preferred method as it is less complicated than other methods, such as trading in the car or using a third party to handle the sale. Before selling a financed car using the cash method, the seller should ensure that the title is clear and all documents needed to transfer ownership are in order.
Online Payment Transfer
Online payment transfer methods can be used to facilitate the transaction when selling a financed car. These methods include PayPal, Venmo, Zelle, Google Pay, Apple Pay, and other online payment services. The seller should also make sure to keep records of the transaction, including the date and time of the transfer, the amount transferred, and any other details related to the transfer.
You can easily sell the financed car by using legitimate methods such as online, through a dealership, or by privately selling it. Make sure you pay off the loan before or during the transaction. Determine the worth of the car and complete the sale using one of the mentioned techniques.
Can you transfer a car loan to another person?
In some cases, a loan can be transferred to another person. It depends on the lender and the terms of the loan. It is important to contact the lender and discuss the situation.
How do I transfer my car’s title?
Transferring a car title typically requires completing paperwork, and you’ll need to provide the vehicle’s title, proof of identity, proof of insurance, and payment for any applicable taxes and fees. If applicable, you may also need to provide an odometer reading and/or a lien release.
Is it illegal to sell a car with a loan on it in Canada?
Yes, selling a car with a loan on it in Canada is illegal. The loan must be paid in full before transferring ownership of the vehicle. You need to have a no objection certificate (NOC).
How can I show my buyer that I have paid off the lien on my car?
The best way to show your buyer that you have paid off the lien on your car is to provide them with proof of payment in the form of a copy of the lien release letter from the lienholder. This document should include the payment date, the amount paid, and the lienholder’s signature.
I owe money on my car. Is it better to sell it privately or to a dealership?
It depends on your situation. If you need the money quickly, selling it to a dealership is likely the quickest option since they will offer you a lump sum for the car. However, if you are willing to wait for a higher price, you may be able to get a better deal by selling it privately.