Selling car privately (car is financed)

browser on 22/04/2014 - 16:06

Hi all,

I have sold a few cars before but first time selling one that is still financed, so not too sure about the procedure.

Say a buyer agrees to pay $20,000 for it, I call the bank to get current balance, for instance $15,000. Is it just a matter of getting 2 bank cheques from the buyer? One for $15,000 payable to the bank which I will forward it on, and the other for $5,000 that I will keep?

Sign the back of the rego then hand over keys and that's it? Or are there more to it? By the way, this is in NSW in case it makes a difference.

Cheers!
Pete

Automotive

Comments

  • Billy_is on 22/04/2014 - 16:24

    I'm unsure if there are any differences between the states, but what you described above is how I sold my last car (in VIC) that had a finance balance.

    In saying that, you should provide the buyer with written confirmation from your financier to say you've paid the balance and there's nothing owing on the car. Beneficial for both parties. Get their signature on your copy if you're worried.

    How the buyer pays the remaining (e.g. bank cheque as mentioned above) is up to you!

    Sounds like you're on the money mate.

    Cheers

  • QW3RTY on 22/04/2014 - 16:27

    Pete;

    Can you not have the buyer pay through $20,000 and then you write through or transfer through the remaining balance to clear the debt? (Assuming the debt is in your name.)

    Might also be worth skimming through the agreement regarding transfers of the vehicle. By selling the asset to the new buyer, you're effectively removing the mortgaged asset from your loan agreement with the bank. Just make sure you're not in breach of any clause in your agreement.

    If you're unsure about anything, call your bank prior to proceeding, just to make sure.

    Cheers

    R

    • Settero on 22/04/2014 - 19:27
      +2

      "Can you not have the buyer pay through $20,000 and then you write through or transfer through the remaining balance to clear the debt? (Assuming the debt is in your name.)"

      this sounds so risky for the buyer!.

    • browser on 22/04/2014 - 23:29

      Thanks, will have to check with the prospective buyer, I guess it will be so mush hassle if the buyer also want to finance from a bank. If it was my car I would just pay it out to make things easy. Then again I wouldn't have financed a car in the first place, unless it's a packaged lease. :)

  • ESEMCE on 22/04/2014 - 16:28
    +5

    I think you should talk to the bank as there may be an early repayment fee.
    Ideally, you should pay out the loan before selling as it will be far easier to sell.

    I would walk away immediately if I were a buyer knowing it was under finance. There's too many risks that I don't know enough about and don't care to learn, especially not the hard way (ie me being liable)!
    All I know is that the finance transfers with the ownership of the vehicle and I don't need that headache!

    • browser on 22/04/2014 - 22:43

      Thanks, that's a good point, to find out about penalties and stuff.

  • stemcell on 22/04/2014 - 16:47
    +4

    I would never buy a car that had outstanding money owing on it, nor would I recommend anyone should. Why should a buyer place his trust in you (a stranger) that you will actually pay off the outstanding amount?, the buyer could lose his $20,000 and the car :/

    • browser on 22/04/2014 - 22:31
      -1

      How can you lose $20,000 and the car? Are you expecting money back after getting the car?

      • hellbound on 23/04/2014 - 11:21
        +3

        I pay you $20k, you give me the car, you don't pay the bank and the bank repo's the car from me.
        Now I'm out $20k and a car. It's certainly a big risk as a buyer.

        • browser on 23/04/2014 - 14:41

          In such case, you only lose $20k, the car was never yours so you can't lose it. ;) Sorry just technicality. :D

          You can only lose a car and $20k when you use your existing car plus $20k as payment of a new car, that you subsequently losing.

          If you pay $20k for something that you did not end up getting, you lose $20k, simple!

        • ESEMCE on 23/04/2014 - 14:56

          bowser, you seem to be unaware that the Finance on a Vehicle is tied to the Vehicle, not the owner of the Vehicle.
          So if I sell you a $20k car under finance, even if you pay me $20k for it, the car is still under finance and if you were unaware of this, you could be the Registered Owner of the Vehicle but the loan could default and the Finance company could re-posess the vehicle..
          Therefore you would lose both $20k AND the vehicle.

        • browser on 23/04/2014 - 15:12
          +1

          Sorry for being stubborn on this point, happy to buy you a beer if I ever meet you. :D

          But look at it this way…

          • You pay $20k in exchange for a car, at this point you haven't lose anything, you swapped your $20k for something of equivalent value.
          • If the bank take away the car, you lose $20k and that's it.

          Saying you can lose $20k and the car suggests you lose $40k in total, which is not ture.

        • ESEMCE on 23/04/2014 - 15:45

          With you now..

        • hellbound on 23/04/2014 - 17:00

          Ah, fair point. You're quite right, you would stand to lose the $20k, nothing more.

  • maybeamacy on 22/04/2014 - 17:14
    +4

    When I bough a financed car, I went with the seller to the bank to get a clear title. I pad my portion out to the bank and the seller paid what was owed on top (bought the car for less than what he owned on it). Bank then gave me a letter saying that the car is no longer a security interest for them and the rest is transfer as per usual.

    • akyeeeahdude on 22/04/2014 - 20:10

      I did this recently - went to ANZ Bank (had finance through ESANDA which are the same company apparently) with the buyer. Got the payout figure from the bank, the buyer paid that directly and then gave me cash for the balance.

      Worked fine.

  • browser on 22/04/2014 - 22:42

    I can understand the concerns. But how about getting a letter from the bank specifying the payout figure, let the buyer pay them direct, does it sound better?

    Was just helping a friend to sell the car as he's moving interstate and he wants a new car after settling down. It's quite a deal and a lot of people been calling about, I just haven't got the time to show it. So I thought might as well find out the steps first.

  • [Deactivated] on 23/04/2014 - 07:06

    The terms and conditions of my car loan

    Can I sell my car privately?

    Yes. Simply pay out the remaining balance of your account. If you do this, the GFV will no longer apply.

  • billy-65 on 23/04/2014 - 07:44

    Very Simple Ask The bank pay out figure today

  • pjcook on 23/04/2014 - 08:04

    The process would be for you to get a payout figure from the finance company, show this to the buyer, who can then arrange to have the finance paid out and the balance go to you. How this is done would depend on how the buyer is financing the car. If they are getting finance then the company they are dealing with would handle all of this and you would get the balance.

  • browser on 23/04/2014 - 14:51

    Thanks guys!

    Looks like it wasn't as complicated as it sounds, got the payout quote for a future date, the bank is happy to write off +/- $50. And turns out the asking price is less than the amount owed, so it will be like: here's the key and here's the dosh, take the car. :)

    So it's not as risky as some suggests, the key is confirming (and verifying) the payout figure, then just work out who pays what. Worst case everyone goes to the bank together.

    It may sound like a hassle, but when the saving is significant I'm sure many buyers do not mind.

  • browser on 30/04/2014 - 01:33
    +3

    Just an update, car was sold last week, finance all cleared and contract finalised.

    Basically got an email of the payout figure and forwarded it to the buyer (we also suggested him to call the bank direct if there's any doubt), we then met at the bank, he deposited a cheque payable to the finance account, my friend deposited the balance in cash on the spot. Buyer drove the car away afterward.

    In addition to signing the rego paper, we drafted a sales agreement to put things in writing, for the protection of both parties. Did the online notice of disposal soon after.

    It was quite straight forward, thanks again for all the advice guys!

    In this case my friend had to pay the balance because the car was sold for less than the finance contract, but if it was sold for more, he would have asked for cash payment of the difference.

  • onlyletters on 02/05/2014 - 16:42

    You should write up a stat declaration for the sale stating the owing amount on the car to prove that you're not lying and additionally, show them the financial documents to show the amount remaining on the car, and for more peace of mind for the seller, call up the bank and confirm the owing amount with a customer service representative and put it on loud speaker; the buyer cannot call up and confirm the amount without your prior approval; a few years ago; I once purchased a car for $0, it had $16,000 owing on it, I paid the bank the $16,000 directly, they removed the title on the car so it no longer came up on revs/ppsr.

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