In the ever-evolving landscape of automobile ownership, the decision to part ways with a financed car can be both liberating and daunting. As a private seller, you may be wondering how to sell your financed car. Autozen is here to help you through the process!
Selling a Financed Car vs. Selling a Car on Finance
Before delving into the details, it's crucial to distinguish between selling a financed car and selling a car on finance. Selling a financed car refers to parting ways with a vehicle that still has an existing auto loan. On the other hand, selling a car on finance involves offering a vehicle for sale with financing options available for potential buyers. In this guide, we will be looking at how to sell a financed car.
Can I Sell a Financed Car?
One of the most common questions that arises is whether it's possible to sell a financed car. The answer is a resounding yes, but it comes with some extra issues to consider.
When you decide to sell your financed car, you should first contact your loan provider and determine exactly how much you still owe on your loan. You will have to be prepared to pay off the loan balance at the time that you sell your car. It’s important for you to know this upfront, as it will play into your calculations of how to make the most profit off of selling your used car. You’re only going to end up with whatever’s left over after the loan has been paid.
In a worst-case scenario, you may find out that you currently owe more money on your loan than you can expect to make off of selling your financed car. Because cars usually lose between 20-30% of their value in the first year, this can occur. Waiting longer to sell to pay down your loan may not be a viable option for you if you can’t handle the car payments or your life circumstances have made your current car unsuitable. In that case, you will need to be prepared to find the additional cash to pay off your loan when you sell your car.
How to Sell a Financed Car in Canada
The process for selling a financed car in Canada varies depending on how you decide to proceed. Let’s compare the pros and cons of your available options!
Selling a Financed Car Privately
When you choose to sell your financed car privately, you will have more to worry about. Firstly, it will be up to you to contact your loan provider to find out how much you owe and make arrangements to pay the balance off. For most owners, that won’t be possible until you’ve been paid by a buyer, so that is another layer of complexity at the time that you are transferring the title and concluding the sale.
Next, you may find potential buyers scared off by the existence of a lien on your car. There have been cases where a buyer has had their new-to-them vehicle seized by a lien holder when the previous owner failed to pay off the loan. If you do sell privately, be upfront with buyers about your financing so that there are no surprises down the line!
You may also have to wait several weeks or more until you actually get a buyer for your financed car. If the reason for selling is that you are having trouble managing the loan payments, this can be a big problem for you.
With all of these issues, you may be wondering if it’s worth the hassle to try to sell your financed car privately. The one upside is that you will usually get a higher price when selling privately. That can be a big help when it comes to paying off your car financing.
Selling a Financed Car to a Dealership
Dealerships are pros at handling all the paperwork related to selling a car, and financing is no exception. If you take your financed car to a dealership, the dealer will contact your loan company and pay them the outstanding balance directly, handing you whatever remains. As well, you can often conclude the deal in one day, freeing you from your financing obligations quickly and efficiently.
Realize that you will pay a price for this speed and convenience. Dealerships need to make a profit when they put your old car out on the lot to sell, so you won’t get as much money for your car as you would in a private transaction with no middleman to take a cut.
However, if you’re in a hurry to sell, or don’t have the time to devote to listing your car and dealing with multiple interested buyers, selling your financed car to a dealership may be a viable option for you.
Selling a Financed Car Through Autozen
So, you want to make the most possible profit, but don’t want the headaches that come with selling a financed car privately? If your car meets our criteria, Autozen is the perfect solution!
Autozen doesn’t buy cars; instead, we hold online auctions that give dealers from across Canada an opportunity to bid on your car. Once you’ve agreed to the highest bid, we will pay your finance company directly, giving you the rest when we pick up your car! We take care of all the paperwork for you, and the whole process may only take a few days from start to finish. Check on our site to see if our solution will work for you!
How to Privately Sell a Financed Car
While dealerships and Autozen will take care of most of the hassles of selling a financed car, you do need to be much more involved when selling your car privately. Selling a car with a lien requires more effort on your part.
If you are in a position to pay off your car loan before listing it for sale, do it. That way, buyers will not have to address the issue at all, making a quicker sale much more likely.
However, paying out a large lump sum is usually not an option when selling a financed car. Start by informing the buyers first that there is a lien on your car. Waiting until you’re negotiating a deal is far too late! If you don’t tell them, and they get a Carfax report on your car, they’ll find out anyway, and that loss of trust in you as a seller will probably result in them walking away.
Paying off the loan balance should be done at the time of the transfer of funds from the buyer to you. You will have to work with the buyer to find a way to do this that will make both of you comfortable.
The buyer may prefer to pay the finance company directly to ensure that the transaction is successfully completed and the lien is cleared, and then pay you whatever is left of the purchase price along with proof that the loan has been paid. Another way to give both sides peace of mind is for the buyer to accompany you to the bank or finance company to witness the payment of the balance owing, and to receive documentation to that effect.
Selling a Financed Car
When you’re feeling the need to sell a financed car, whether because of financial or lifestyle considerations, it’s important to do your homework and weigh the options available to you. And if you’re looking for maximum payout with minimum fuss, talk to the experts at Autozen!
