When in the midst of preparing to rid yourself of an old car by selling it, you will have a checklist of things that you need to do in your head. Normally this will include finding all the maintenance receipts, cleaning the vehicle, having any mechanical issues fixed (unless it costs too much), and so forth.
The most important query you will want to ask yourself may just be this: Do you legally own it? Because if you haven’t finished making payments on the car’s finance, you don’t own it. Not being the official owner will make it harder to sell.
Here are some things you need to know if you are traveling down this road.
Is it illegal to sell a car with money owing on it?
Not really if you do it in the right way. To start off, it is important to know the mechanics behind car loans. In the event of not being in a position of making payments on time, the secure loan has a major precaution built into it. That precaution is the car itself being used as security.
Which means that it will be repossessed if you don’t pay up. Now you know the story behind why it is called a “secure loan”. After your car is snatched back from your hands, the finance company or bank will then sell it to someone else.
How else are they going to get the money back that you can’t pay? The money will be extracted from the vehicle instead of you.
What Comes Next?
When one is in the position of having a car that is under finance, but the loan repayments haven’t finished yet, your car is what is called “encumbered.”
Selling a vehicle that is encumbered turns out to be slightly more complicated than selling under normal circumstances. But not so much that you can’t do it.
There are a few avenues to go down. You could have a chat with the bank or company that provided the loan. You may be required to complete the loan repayments all at once, which will most surely incur bank fees.
In the event that the cost of repayment is more than the value of your car, it won’t be too hard to pay that gap off. And then you will no longer have a vehicle in your possession that is encumbered.
If you are doing this so you are free to buy a better vehicle, there could be a superior plan of action. It may involve having a chat with a car buyer like King Auto to sort out a finance deal to pay off the rest of the debt.
Don’t Be Dishonest
Vehicles that are encumbered are always being bought and sold. It isn’t some sort of rare event that you need to buy expensive tickets for. All that society asks for is that you confront the situation with one hundred percent honesty and integrity. But isn’t that the story of all our lives? Honesty really is the best policy, when it all boils down.