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How to Sell a Financed Car in Canada: Our Quick Guide

How to Sell a Financed Car in Canada: Our Quick Guide

If you need to sell your car for any reason but are still paying your auto loan, can you sell it? Can you sell your car to a dealership while there is a loan still outstanding?


We asked our auto loans team whether you can sell your car to a dealership with a loan outstanding and how to do it if you can.

Selling a Financed Car

You can sell a car to a dealership with outstanding finance but it involves quite a lot of paperwork. It is something we can help you with though.


Until the loan is paid off, you don’t actually own the car so have no legal title to sell it. However, given the nature of cars and car sales, there are mechanisms in place to enable you to sell the car.


Much will depend on the loan you have outstanding on the loan and whether the lender will allow you to sell it.


You will need to:


Discuss it With the Lender

Before you do anything, discuss your plans with your lender to see what they say. If they agree that you can sell the car, they will work with the dealership to settle the loan.


While talking to the lender, make sure to get a settlement figure as you’ll need this to make an informed decision when it comes time.


You are much more likely to get a positive response from a lender when you discuss it with them first than if you just went ahead without consulting them.


We want them on side, which is why we recommend discussing it first.


Tell the Dealership the Car is Financed

Make sure you tell the dealership right away that the car is still under finance. It’s a question we will asked anyway but can make a difference to how we approach the purchase process.


Buying a car under finance requires more paperwork and we need to make sure we have the resources in place to do it.


Work Out the Deal

If the lender and dealership agree, you can have the car appraised and come up with a value. If the value exceeds the settlement figure, you can sell the car with not much else required from you.


If the value falls short of the finance, you’re going to need to make that up in order for the sale to go through.


Sell the Car to the Dealership

If you agree the offer and sell the car, the dealer will work with the lender to settle the loan out of what they would be paying you. Once the loan is cleared, you’ll get the remainder of the money, if there is some left over.


In situations where the value of the car is less than the outstanding loan, you will need to pay the dealership the balance to even everything out.


As you can see, it’s a complicated process that requires a lot of paperwork and coordination between the dealer, the lender and you. That’s why some car dealerships don’t like buying cars that are financed.


Nothing is impossible when you put your mind to it though!



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