Selling The Car That Has Accrued A Financial BalanceFast Action Finance
It is easier to sell a vehicle that you have paid off; a vehicle you now hold a title on. All you need is to check the terms and conditions of the deal – particularly the small print. It is not unusual to discover that you cannot sell your vehicle until the loan is paid off. And if some people tell you that you can get a car title loan with a vehicle that still has a financial balance, this is not true as title loans are only granted to cars that are paid off fully.
Nevertheless, you may still sell off a vehicle that features a finance balance. It is not unlike the traditional hire purchase (HP) agreement, where you did not actually own the vehicle until the hire purchase was paid off. You need to take up some extra steps. The buyer needs to have title to the vehicle so that they can register it; otherwise they do not legally own it. Considering you do not hold title until the balance is paid off, the transaction becomes more complicated. However, you should know that a vehicle with a finance balance can still be sold to a dealer or a private buyer.
Sell to dealers
Selling the car to a dealer offers the easiest way of selling a vehicle that has a finance balance. Dealers possess the necessary experience required to handle this kind of transactions. However, when you go this route you are likely to get an unfavorable deal because dealers try to give themselves sufficient margins to turn profits when they sell the vehicle to someone else. Make sure to shop online so that you may determine whether or not you are getting a good deal.
Check the vehicle’s fair market value and ascertain whether what the dealer is offering is indeed a fair price. Once you accept what the dealer is offering you, the dealer makes all the financial arrangements with your lending company. The dealer pays off your lending company and gives you the balance. If in case you owe the lender more than the value of the vehicle, you will be called upon to pay the lender the remaining balance once the vehicle is sold. After the lending company receives the balance, it will then release title to the dealership.
There is more money realized from a private sale compared to a dealership sale. Nevertheless, you need to undertake more work when it comes to a private sale in order to get the vehicle’s title released. Most of the buyers assume you own and hold title to the vehicle as long as you are selling it in your name. Because you do not hold title to the vehicle it is a good idea to clearly state this in the advertisement. This will avoid confusion and avoid wasting the time of a potential buyer. Some people are unwilling to enter into this complicated transaction, although others are ready to work with you.
Conduct business at the lender’s office
It is a good option to go to the lending company with the buyer when selling your vehicle to a private buyer. This works well especially when the lending company is local. Consider calling ahead so as to make sure the vehicle’s title will be ready. Therefore, the buyer will be in a position to pay directly to the lender and you are left to pay the difference. If the financial balance is upside down, so that the value of the vehicle is less than the loan payable, you will be called upon to pay the difference to the lender. The buyer can then get title from the lending company.
Open an Escrow account
You can still sell a vehicle with a balance even if your lending company is not local by setting up an escrow account by use of an escrow service. Escrow services are a neutral third party who holds the money belonging to the buyer until the seller of the vehicle pays the car loan and obtains title. Buyers do not have to worry that the seller might take the money and not utilize it to pay of the car loan. On the part of the seller, they do not have to worry that the buyer could have provided bogus funds. The escrow service does verify the funds to make sure that they are good.
The service grants you the ideal opportunity to come up with the money to pay off the car loan, perhaps by borrowing cash from family and friends. Because you already have money in the escrow account, it becomes easier to borrow the cash.
If you cannot find a buyer who is willing to buy your vehicle or you cannot secure ways of paying the excess debt that you owe on the vehicle, you will need to find some extra money for purposes of covering the difference. You can find some stuff to sell or boost your income. You can sell some major items such as jewelry or extra furniture or sell electronics. Also, you may consider getting work overtime on your current job or get a second job.