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How to sell a car that you still owe money on

Selling  a car is already a complicated and tedious process. It becomes even  more intimidating if there is still an existing financing on the vehicle  you’re selling. Fortunately, it’s a relatively common transaction —  people and dealers do it every day.

Selling  a car is already a complicated and tedious process. It becomes even  more intimidating if there is still an existing financing on the vehicle  you’re selling. Fortunately, it’s a relatively common transaction —  people and dealers do it every day. While it is definitely easier if  your vehicle is already fully paid-up, you still have several options  available when it comes to selling a car with an existing financing.

There are two key steps to a successful sale:

Pay off the remaining vehicle loan  — possibly with the sales proceeds from your buyer, and any extra funds  that you bring to the table (if your car loan is higher than the  transacted price).

Transfer the vehicle ownership — The  Land Transport Authority (LTA) of Singapore have recently implemented  ways for you to transfer the vehicle to your buyer in a safe — and  comfortable — way for both sellers and buyers.

The  process will depend on several factors, including who you’re selling to  (Is it a dealer or a private buyer?) and where your loan is held.  Here’s a basic overview of how to sell your car.

first — Get an official Full settlement amount

First,  ask your bank or financing company how much you need to get rid of the  loan and sell your car. Ask if there’s anything else you need to know  about, such as prepayment penalties and an estimated processing time for  filing the “FORM B”. The typical time line for the lodging of “Form B” is between 1 to 3 working days (for most Banks) and up to 5 working days (for financing companies).

What is form B?

When  you apply for any financing options for your car, the Bank/Financing  company would lodge their interest in a vehicle arising out of a grant  of financing over that vehicle in accordance with the Code of Conduct  using “Form A” .

“Form B” does  exactly the opposite. In the event that you have fully settled/redeemed  your existing financing on the car, it allows the Bank/Financing  companies to discharge your vehicle from the Hire Purchase, Finance  & Leasing association of Singapore (HPFLAS) systems.

Most direct buyers will not pay unless you can show that “FORM B” has been lodged — via, so this is a critical step.

Pay off the loan yourself if possible

If  possible, the most ideal thing to do is to pay your loan off before  selling the car. That way, you are clear to transfer the car ownership  as soon as you receive payment from the buyer of your car. This is most attractive to  buyers, so you’ll have an easier time getting the price you want. If  you still owe money on your car and clearing the financing on your car  is hassle, some buyers may be hesitant to buy.

While  this is ideal, we understand that not all Singaporeans have the ready  liquid cash to pay off the loan themselves. What if you are not able to  pay off the loan yourself first?

Trade in with a dealer (OTUA FLASH-SALE)
  1. Easiest way to sell:  Trading in your car is easier than selling it to an individual. Dealers  commonly handle transactions like this, and they’ll deal with all the  paperwork. After paying off your loan ahead of time, it’s the second  best option (in terms of convenience). You might even be able to sell to  a dealership without buying one of their cars — some dealers pay for  used cars just to sell them on the lot. OTUA Flash-sale allows you to get the highest dealer offer price in just 1 hour at the comfort of your own couch.
  2. Less money:  The ease of selling your financed car to a dealer does not come for  free. You’d probably get more for your car if you choose to sell it to a  direct buyer (through classifieds or OTUA Connect!).
Private Buyers Who Trust You

You’ll  almost always get the best price for your car if you sell to a direct  buyer. If the buyer trusts you, it may be as simple as selling the car  with the understanding that the “FORM B”  is not yet available. This is somewhat risky for the buyer, but if you  document everything, it’s not the worst idea in the world.

You  can hand over the keys, pay off the loan with sales proceeds, and  transfer the vehicle ownership over after you get it from your lender  (which may take up to 7 working days). You can also ask your buyer to  pay the lender directly if that feels more comfortable, but this still  requires substantial trust.

While  this is great for the seller, OTUA does not encourage such practices as  the potential implications can be huge for the buy in the event that  the seller goes back on his words. Also, if the buyer is taking a loan  for his purchase, this option is not available.

How otua can help you

Another option is to use a neutral intermediary (OTUA)  to make sure that the deal goes smoothly. Escrow services can protect  both buyers and sellers — If the buyer doesn’t pay, you keep your car.  If you don’t transfer the car ownershipArticle Search, you don’t get any money.

This  is especially crucial if your buyer chooses to apply for any financing  to buy your car. The banks and finance companies will never pay out the  “loan amount” until the car has been successfully transferred to your  buyer.

OTUA  will assist in the settlement of your existing loan (up to the  transacted price) for a small fee of $200(or 1% of your settlement  amount whichever is higher) and ensure the smooth sales journey for both  buyer and seller. OTUA helps in car dealerships.

Find out more about how OTUA is the EASIEST and FASTEST way you can sell your car for the MOST amount of money —

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OTUA is a Singapore's premiere automotive match-making platform. At OTUA, we connect sellers to our network of 300+ dealers and more than 1000 potential direct buyers.

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