Saturday, October 15, 2022

Can You Sell Your Car Back To The Bank

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Wrapping Up Legal Matters

How to sell your car – and make the most cash | Top10s

The legal side of selling a car is not quite as simple as most people would like it to be. If youre planning to sell your car, get a list of the specific requirements in your state from the Department of Motor Vehicles. And be sure to follow those requirements to the letter.

Some of the documents you should have prepared includes the following:

Also be certain that the registration on the vehicle is current. If it isnt, it can lead to problems after the sale, including the payment of late fees.

Protect Yourself From Potential Liability

Even after you’ve completed the sale of your vehicle, there is still one final document you want to make sure you fill out and submit to your state’s DMV. This document is called a Notice of Sale Form in many cases, although it may be called other names in some states.

A Notice of Sale form protects you from potential liability issues by informing your state’s DMV that you no longer own the vehicle. If the buyer of your vehicle is involved in an accident or commits a crime while driving the car, you may still be held liable if you do not promptly notify your state of the sale. Always ensure that you notify the DMV in your state as soon as possible about the sale of your used car.

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Contact Bank For Payoff Amount

After you find a buyer and agree on a selling price, contact your bank. Your bank or car loan lender should then give you what is called a “10 day payoff amount.” This simply means that if you send the payment within 10 days of the quote, you won’t incur any additional finance charges. However, if you do not send your payment in within 10 days, the bank may hold the title until any further accrued interest charges have been paid.

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Learn How To Pay Off And Transfer The Title For A Financed Car

Selling a car can be complicated, and its even more intimidating if you still owe money on the vehicle. It is slightly easier to sell a vehicle you own free and clear, but you have several options when it comes to selling a financed vehicle.

The specific course of action you take will depend on several factors, including where your loan is held and whether the purchaser is a dealer or a private buyer.

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If the lender is not local, youll need to bring the bill of sale on the car to your state Department of Motor Vehicles. Youll want to obtain a temporary operating permit for the buyer. This will allow you to transfer the vehicle to the buyer, and then to deliver clear title to the buyer once the loan has been paid.

Obviously, you will not have the title until the loan is paid off in full, so there will be a delay of several days while that process is completed. You may have to pay a fee to your lender to expedite the title, a process that ordinarily takes several weeks. The risk of this delay will be a problem primarily for the buyer, since he or she will have a vehicle without having the legal title. However, there is no easier way to complete the sale, unless you have the personal funds to pay off the car loan prior to the sale of the car.

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What Are The Benefits Of Voluntarily Surrendering Your Car

Before we discuss those drawbacks, lets talk about some of the more positive aspects of handing over your vehicle voluntarily:

  • Firstly, you can avoid some of the extra fees the lender would charge you if they had to hire a repo-company to tow the vehicle from your driveway, which could happen at any point, totally unannounced.
  • Not to mention, youll be returning your car willingly. Because of that, your lender may be more inclined to keep you on as a future client, as long as you pay back whatever loan related costs remain.
  • Although your whether you give the car back willingly or not, that damage may be less severe if you miss fewer payments and the lender doesnt have to turn your file over to a collection agency.

If You Decide You Dont Want A Car You Just Bought Many Auto Dealers Are Unlikely To Let You Return It But There Are Exceptions

The easiest way to find out whether a dealer accepts returns is to ask ideally, before you make a purchase. If its too late for that, being able to return the car typically depends on the dealers policies.

What if the dealer is unwilling to work with you? You might have some options if you decide that you dont want the car anymore or that you cant afford the monthly loan payments.

Lets take a closer look at returns, including what some other options are and what you can do to help ensure you get a car thats right for you in the first place.

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How To Determine Your Car’s Worth

Today’s buyers are a savvy bunch: in a private sale, they’re unlikely to pay much more than trade value , because they’re able to research current market values on the internet. And of course, a dealership will always try to offer you somewhat under trade value, because they also want to maximise their profits.

Your safest option would be to use the trade value as a guideline, and determine if you owe the bank less than the trade value. If the difference is to your satisfaction, you could decide to sell your car , but if you owe more than it’s worth, you should rather wait until that situation has turned around before selling .

How To Return A Leased Vehicle

How to sell your car when you still owe money on it

If you’ve leased the car, you’re in a somewhat different situation. Obviously, you can’t sell it.You can return the vehicle to the dealer, but if it’s before the lease expires, you’ll likely face some stiff early termination fees. Plus, you will still owe the balance remaining on the lease andâto add insult to injuryâalso lose the upfront money originally paid.

However, drivers who want out of their contract ahead of schedule can take heart: There are a few options that allow you to circumvent the usually harsh termination penalties. One frequently overlooked pathâand often the least expensive choiceâis to transfer the lease to someone else.

It works like this. Suppose you have two years left on a three-year lease. Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies donât allow such transfers, the vast majority do. The trick is finding someone interested in taking the reins from you.

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Get Information Before You Sell

No matter how you want to sell a vehicle with a loan whether you wish to sell it to a dealer, trade it in or sell it to a private party there is some information you should determine first.

  • Find out how much your car is worth. Determine your cars value using a vehicle valuation site, such as Kelley Blue Book or Edmunds. Enter key information about your car: its year, make, model and overall condition, and the zip code in which you reside. On the results page, youll see that who you sell the car to can impact what the car may be worth choose the value based on how you plan to sell the vehicle .
  • Determine the payoff amount. This is the amount you need to pay to clear the loan on the car before transferring the title. The best way to get this number is to contact your lender directly to ask how much you owe. The payoff amount can be different from your loan balance typically, the payoff includes any due interest, fees and possible prepayment penalties the lender may charge. Go over the available payment methods and any payoff requirements with your lender to avoid delays. Once you have the two values, subtract the payoff amount from what the car is worth.
  • If your car is worth more than the payoff, the number will be positive, meaning you have positive equity. This will allow you to potentially walk away from the sale with some money in your pocket.
  • Possible causes for delay include not knowing your correct payoff amount

    The Loan Needs To Be Paid In Full

    When you find yourself unable to make your car payments and ultimately choose to return the vehicle to the dealer , the dealer usually turns around and attempts to re-sell the vehicle. The proceeds from that sale would then go towards repaying the original loan. In most cases, however, the proceeds from the second sale are not enough to repay the original loan in full. The debt left over is still your responsibility.

    For example, lets say you bought a car with a $25,000 loan. A year later you returned it. Theres still $23,000 left on the loan. The dealer manages to sell the car for $18,000. In this scenario you would still be on the hook for $5,000.

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    Documents Required To Sell A Financed Car:

    Apart from the NOC and two copies of FORM 35, the documents required to sell a financed car are same as those required while selling a non financed car.

    Heres a quick preview of the documents that are needed to sell a car:

    PAN Card
    SBI 300
  • Even after you receive the NOC and Form 35, you need to wait for another two weeks. Why? Because that is the ideal time the RTO would take to clear the HP from your RC and transfer it in the name of the buyer.
  • However, the bank may not provide NOC to you if there is any loan linked to the car or any outstanding balance left to be paid on the car.

    What To Do If You Can’t Make Your Car Payments

    Are you planning to sell your old junk car that stood in ...

    If you are struggling to make payments on your car loan and want to avoid harming your credit rating with a voluntary surrender or repossession, you have options:

    If you are trying to rebuild your credit after a voluntary surrender, the most important things you can do to improve your scores are to make all future payments on time and keep your credit card balances as low as possible. You can also try boosting your FICO® Score right away by adding your positive utility, cellphone and streaming service payments to your Experian credit report with Experian Boost.

    Thanks for asking,

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    How Can You Avoid A Voluntary Repossession

    Suffice to say, while voluntarily surrendering your car can save you a lot of trouble down the line, it can still lead to some harsh negative consequences for your credit and financial health as a whole. So, it may be in your best interest to avoid the process however possible. Heres how you can potentially bypass a repossession entirely:

    • Discuss the situation with your lender before you start defaulting on your loan. They may be able to offer you adjusted payments, a payment deferral or an extension on your term.
    • If those options arent possible and your credit is still in good shape, you may be able to refinance the vehicle and acquire a new, more affordable loan contract.
    • If the problem is your spending habits, try creating a proper budget, reducing your monthly expenses, or earning more income with a second job or side hustle.
    • If theres sufficient equity in the car, you may be able to trade it in for a cheaper model or sell it so you can use the profit to pay the outstanding loan balance.
    • If you dont break even or make a profit for the sale, cover the remaining difference using your own funds so you can transfer the title to a new owner.

    Returning A Car To A Dealer

    The hard truth is that most auto dealers arent going to let you return a vehicle that you’re financing. Some dealerships have a return policy sometimes around a seven-day guarantee when youre financing a car sight-unseen without a test drive but most dont offer one. It wont hurt to give your dealer a call and ask, but most franchised dealerships dont have return policies.

    When you finance a vehicle with an auto lender, the cars title has a lien on it, which names the lender as the lienholder. This gives them ownership rights, and prevents you from transferring ownership of the vehicle until the loan is paid off.

    Once the loan is complete, the lien is removed and the car is yours. If you need to get out of the auto loan before your loan term is over, you can sell the vehicle privately and pay off the car loan. Selling the vehicle to a private party may get you enough money to remove the lien and relinquish yourself from the auto loan pretty easily. You wouldnt be returning the car to the dealer, but you can get out of the auto loan this way.

    If you try to sell it back to the dealership, they may not offer you enough money to cover your loan balance. Trade-in values are typically less than the actual cash value of the vehicle.

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    Determine Your Cars Current Market Value

    If youre thinking about trying to get out of your car loan contract because of the possibility of it becoming upside-down, its a good idea to get an estimate of the cars current market value, before jumping to any conclusions.

    You can likely find a number of websites that will calculate the value of your car, based on certain criteria like the make, model, color, etc. However, if you can also get a basic estimate by checking the mileage, going over the cars various features and what shape its in, then look at used car classifieds and websites to see what cars similar to yours are currently going for. Once youve done this, calculate the approximate amount of your loan payments, making sure to factor in the interest costs, weighed against your income. If your loan payments add up to more than the car is worth, you might want to consider other options.

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    Selling A Car At Auction

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    Auctioning a car is quick and relatively hassle-free.

    But theres no guarantee your car will reach its reserve price, and you might end up getting less for it than through other ways of selling. And, if it doesnt reach your reserved price, youll have to take it home and try again in another sale.

    Most auction buyers are in the motor trade. If youre lucky and attract a private buyer, they might be prepared to pay more for your car than a dealer would be.

    Large car auction companies such as British Car Auctions and Manheim have branches throughout the country, but you might find it easier to use a local independent auctioneer nearer to you.

    You can also look at online auction sites like eBay, but youll have to do a lot more of the work around creating the advert and answering questions. If your car sells, the winning bidder pays for it immediately and the auction company then gives you the sale price minus its commission. This can be up to 10% of the sale price.

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    The Actual Last Resort: Giving The Vehicle Back

    If you cant sell the vehicle to a private party, a dealer wont buy it, and you dont have the option to roll over your auto loan, then you may have to consider voluntarily surrendering the car to the dealership.

    This is commonly called a voluntary repossession. Voluntary or not, its classified as a repossession on your credit reports. Once you return the vehicle, its considered a default because youre no longer making payments. The car is then prepped to be sold at auction, and the proceeds from that are applied to your remaining loan balance. If the loan isnt completely paid off, called the deficiency balance, you still owe that to the lender.

    Having a repossession listed on your credit reports, and the possibility of still owing your lender money after the auction sale, is why a voluntary repo should be considered a last resort. You may be better off to continue making the payments on the vehicle, since a repo can make it difficult to get into another auto loan with most lenders for at least one year.

    Enlist Your Lender In The Sale

    Once you know the payoff on the car loan, and have decided to go ahead with the sale, you should get the lender involved in the sales process. They hold title to the vehicle, and you cant sell the car without it.

    Ask your car lender the best way to proceed so that you can pay off the loan and deliver the title to the buyer in the shortest time possible. This is not an uncommon occurrence, so the lender should have procedures in place.

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