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How to Sell Your Financed Car Easily in Canada

How to Sell Your Financed Car Easily in Canada

Selling your car to a dealership is a fast, painless way to raise some extra cash, make some money for a down payment or clear space for a new car. But what if you’re still paying a car loan on the car you want to sell?


We asked our auto loans team to outline how you go about selling your car to a dealership when you still owe money on it.

Selling a Financed Car

If you bought a car with an auto loan, you don’t actually own the car outright until it’s fully paid off. If you want to sell the car to a dealership or privately, you need to settle the finance first and then you have legal title to sell the car.


One of the great things about selling to a dealership is that you can do it all at once, with minimal delay.


Here’s how.


Get a Car Loan Settlement Figure

Your first task is to get a settlement figure from your lender. This can be an informal figure from a customer service agent or a more formal one via letter.


The figure will have an expiry date at which time the number will change. Use this as part of the calculations for paying off the car loan.


While you’re there, confirm that they will transfer the title to the dealership in good time when they buy the car. Most dealerships appreciate there might be a small delay while all the paperwork goes through but it’s good to know how long it might take.


Figure Out What Your Car is Worth

Next, you’re going to want to know what the car is worth and compare it to the settlement figure. Ideally, the car would be worth more and would leave you cash over but occasionally, the loan may be for slightly more than the car’s value.


Check like for like cars at Carfax, Kelley Blue Book, Auto Trader, eBay, Craigslist and other places to get a good idea of what your car is worth on the open market.Remember, dealerships cannot afford to pay market rate but can now get ever closer to it due to rising car prices.


If the car is worth more than the loan, you can proceed immediately. If the car is worth less, you’ll need to raise some money so you can settle the loan in full when you sell.


If you don’t settle the loan in full, you won’t have legal title to sell the car, so you won’t legally be able to sell it.


Pay Off Your Car Loan

Next task is to visit the dealership and get your car appraised. We recommend making an appointment but we can cope with walk-ins, depending on how busy we are.


We’ll inspect the car and make you an offer. Depending on how that offer matches your auto loan settlement figure, we can buy your old car there and then, or not depending on the situation.


We will work with you and your lender to settle the loan and transfer the title to us. It may take a little while but once the paperwork is complete and the loan settled, we can pay you the balance if there is any and you’re done!


You Could Trade it in 

If your plan is to sell your financed car then buy another one, a trade-in could be an option.  In this scenario the dealer rolls the remaining balance of your old loan into your new one, less whatever value they see in the car.  Obviously it only makes sense to do this if you need another car, so it’s not for everyone.



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    Categories: Auto Loan

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