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Selling A Car Under Finance...

18 May 2016, 12:37 PM

There was a time when car owners in India considered their wheels to be prized possessions and kept them for extended time periods. It also helped that extra money was hard to come by, not to mention the fact that choices were highly limited. Not anymore. The opening up of the economy ushered in a new era of the purchase generation. As car finance in India boomed, so did the availability of new cars in the market.

Today, there’s a mind-boggling variety of cars at every price-point that one can think of. From the smallest budget hatches to super-saloons and luxury SUV’s with their jaw-dropping price-tags, it is all available here. Plus, disposable income has grown as has the awareness of car buyers. Today, it isn’t uncommon today to come across an owner selling a car under finance, for he/she’s caught a fancy for the newest thing in the showroom.

Typically speaking, the way car finance in India works, there’s still some nitty-gritties that must be taken care of when selling a car whose loan hasn’t been paid off. This is because, in addition to the buyer & seller of the car, there’s also the bank/financial institution that has loaned the money for its purchase in the first place.

The easiest way to begin is by checking the Registration book/card to see if the hypothecation is still valid on a car. Next is to speak to the lender to see just how much of the loan is still to be paid off. This is because, the responsibility of the loan outstanding is on the owner and as the ownership of the car is transferred from the seller to the buyer, it is transferred to the latter. This way, one is always in the clear about the amount they owe the lender.

Foreclosing a loan is another alternative that’s popular when selling a car under finance. In these situations, the seller sometimes uses the proceedings from the sale to close the loan a lot before it is due for repayment. Some buyers pay the loan outstandings to the lender, and only then is the balance paid to the seller.

So the next time you’re thinking of buying a car that’s still has an outstanding loan on it, breathe a little easy in the knowledge that it isn’t as impossible as it seems.

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