Selling a car with residual financing: how it works

Selling a car with residual financing: your guide to success

If you want to sell a car that is still financed, the situation often seems complicated. Many car owners are faced with the question: “Can I sell my car even though I still have to pay off the loan?” The answer is: Yes, it is possible - and often even easier than you think. In this blog post, we'll show you how you can sell a car with residual financing, what options are available and what you should look out for to make the process as smooth as possible.

How does the sale of a financed car work?

If you are still financing your car, the bank or financing institution holds the vehicle registration certificate (registration certificate part II) until the financing has been paid off in full. It can therefore be a little more complicated to sell the car. Here are the steps you should take:

• Determine the remaining debt: Before you sell your car, you need to ask your bank how much you have left on your loan (remaining debt).

• Purchase price covers remaining debt: Ideally, the sale price of the car should cover the remaining loan amount. In this case, you can pay off the loan immediately and have the vehicle title released.

• Sell the car for less than the remaining debt: If the sale price is not enough to cover the remaining debt, you can either pay the difference out of your own pocket or try to involve the buyer directly in the financing process.

Options when selling a financed car

• Direct sale to the buyer: the buyer pays you the purchase price and you settle the remaining debt with the bank. The buyer then receives the vehicle title.

• Sale via the dealer: A dealer can buy the car directly from you and handles the transaction with the bank. This is the most convenient method, but the price may be lower.

• Sell the car and take over the loan: A rarer but possible option: the buyer takes over the existing loan and pays the remaining installments.

💡 Good to know: Some banks offer special repayments or early loan repayments without high fees. Check whether this is an option for you to make the sale easier.

Frequently asked questions (FAQ)

❓ Can I sell my car without paying off the financing in full?
Yes, the buyer can transfer the remaining debt directly to the bank so that the financing is paid off before the vehicle title is transferred to the new owner.

❓ What happens if I owe more than the car is worth?
In this case, you will have to pay the difference out of your own pocket. Alternatively, you can look into refinancing the remaining amount.

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