Selling car, have car loan outstanding

Pub07 · 25-09-2007 3:19pm #1

Hi, might seem like a stupid question but I'd like to clear it up. I'm selling my car which has a 12K loan outstanding. My da says there could be a problem as because there is money owed on the car I'm not the full owner of it and mightn't be able to sell it. I just presumed that I would pay the loan off to the bank and it would be a separate issue to the sale of the car itself. So what's the deal, do I have to pay off the loan before I sell the car or can I sell it and then pay it off?
Cheers.

ytpe2r5bxkn0c1 · 25-09-2007 3:23pm

If it was a straight loan then the lender usually has no hold on the car. A HP or finance agreement can be a different kettle of fish.

Steve · 25-09-2007 3:24pm

Read the small print in the loan agreement - it should have your answers.
Depends on the type of financing you used as well.

The car may not be yours to sell until you pay it off.
Also - there may be early re-payment penalites to consider.

Best bet is ring the bank / finance company.

smash · 25-09-2007 3:58pm

you can call the loan company and get them to change your car loan to a personal loan so you can release the car.

bazz26 · 25-09-2007 4:27pm

Usually most potential buyers will do a HPI check on the car and will see that there is outstanding finance on the car.

I'm not sure though if personal or motor loans from banks, lending institutions show up on HPI reports. A Hire Purchase loan will definately though. Really depends on the type of loan, my guess.

Best thing to do is be up front with the buyer and arrange for both of you to go to the Finance company together and pay off the outstanding loan as part of the agreed purchase price.

bazz26 · 25-09-2007 4:31pm

steve06 wrote:

you can call the loan company and get them to change your car loan to a personal loan so you can release the car.

There could be an expensive charge to do this if they will as in alot of cases the interest rates for both types of loads are different. Plus I'm not sure how it works as the bank surely no longer have a recoverable asset in case the loan goes bad.

oleras · 25-09-2007 4:41pm

bazz26 wrote:

Usually most potential buyers will do a HPI check on the car and will see that there is outstanding finance on the car.

Wrong, since HPI is an English service. :rolleyes:

OldmanMondeo · 25-09-2007 4:50pm

I was in a similar position as the OP. Basically what I done was when the buyer came to see the car I had already rang the bank and got the settlement figure. I explained that there was money owed on the car and when sold I wanted a draft made out to the finance company. WhenI was handing the car over I gave the new owner a stamped adress enevlope with a letter stating that the enclose was the final payment against the loan 9make sure you include the accout number) and let the new owner post this. As finance was against the car, it would be the new owner out of pocket if he failed to post it.
As long as you don't owe more than the car is worth you should be alright.

OldmanMondeo · 25-09-2007 4:51pm

oleras wrote:

Wrong, since HPI is an English service. :rolleyes:

There is an Irish equlivent. Your bank should be able to give you details as they check on every car they carry out finance on.

smash · 25-09-2007 4:53pm

yeh the interest rate will change... is the OP planning on using the money from the sale to cover the loan?

Fozzie Bear · 25-09-2007 4:58pm

If it's a bank loan then you should not have a problem from my experience. I have done this for my last 3 cars and i had no problems. When you apply for the new loan they obviously will see the current outstanding loan. Just tell them that you will clear this by selling your current car but you want to see if you will be approved for the new loan before doing so.

If any potential buyer of your current car is having cold feet about handing over money because of finance issue, you can always give them the option of paying the money directly to the bank/lender themselves instead of giving it to you. That way they know that any finance on it has been cleared.

Tails142 · 25-09-2007 5:04pm

When you get a personal/motor loan from a bank it is unsecured. Therefore it has no ties to the car. If the bank didnt ask you anything about the car, or for any of its details it is unsecured and therefore you can sell it.

A Hire purchase loan (like from a dealer) will probably be secured on the car; so if you crash it you may not have to keep paying. Think of it like a mortgage on a house; they value the house and use it to secure the loan, so if you go broke they can take the house off you as compensation.

oleras · 25-09-2007 6:16pm

Tails142 wrote:

A Hire purchase loan (like from a dealer) will probably be secured on the car; so if you crash it you may not have to keep paying. .

First time i heard of that.....please explain more.

Woogie Boogie · 25-09-2007 10:09pm

depends how the car was financed. if it was a personal loan then there should be no problems if the loan is secured against the car you would technically be meant to sort this out first but what i know at least one did was the buyer and seller went into the sellers bank. the buyers draft was then used to clear the outstanding finance and the remainder was lodged into the sellers current a/c

Selling car, have car loan outstanding

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