A car is, without a doubt, one of the most expensive purchases a person will make in their lifetime. The financing option you choose to make the purchase will affect your personal financial situation for years to come (till the loan ends). So, making a well-informed decision when choosing your car loan is very important.
So, what does one need to look for in a car loan? Here are some important aspects to consider when selecting a car loan.
The Benefits of a Pre-Approved Car Loan
A pre-approved car loan gives you a clear idea of what you can afford. Once you have a definitive amount as your loan pre-approval, you can make a sound financial decision, by choosing a car that falls within your affordability (and not stretching your resources too far).
Another benefit of a pre-approved loan is that dealers and car sellers tend to consider you a sure thing. When you have a pre-approval, it means that you are quite serious about buying a car. And that gives them the push to give you their best offer, maybe even throw in a couple of extras to ensure they don’t lose your business. This, in turn, will give you the upper hand to negotiate a better price.
Enquire About Penalty Fees
If you like the idea of making extra repayments, paying more than the minimum monthly repayment amount, to close the loan off in a shorter period, then you need to check about any penalty fees that may apply. Some car loans penalize you for extra repayments, as it basically means that you won’t be paying as much as you would if you had the loan full term. Sometimes, even with the penalty fees, repaying the loan off faster still works out to be cheaper. So, this is another essential factor to keep in mind when choosing your car loan.
Low-Interest Rate – Is It A Trap?
The low-interest rate should not be the only criteria you look for when choosing a car loan. Especially, when you consider the fact that many car loans have low introductory rates to attract customers, but, as the loan progresses, the interest rates become higher, putting you in a tight financial spot. If you find a car loan with an unbelievably low-interest rate, find out what the terms and conditions are. Chances are that they come with some caveats.
Buying a car is a big financial decision. Avoid getting into a financial crunch by knowing exactly how much you can afford to spend on a vehicle, finding a good financing option, and having a clear plan for the quick repayment of the car loan. By taking care of these aspects, you can keep your finances under control.
So, Can You Sell A Car To A Wrecker Or Scrap Car Removal Dealer when It’s Under Finance?
While it is possible to sell a car that is still under finance, there are several issues to consider. First, it’s worth noting that a car with the outstanding finance is also known as an encumbered car. Instead of the first buyer, a car loan is secured by the vehicle. As a result, if you offer the car but come up short on repaying the credit, the unused buyer may learn that the loan specialist possesses the vehicle. This makes your vehicle less appealing to potential buyers.
However, selling an encumbered vehicle is perfectly legal; you must be honest with potential buyers about the situation. For example, notify your lender if you decide to sell your car, and they will explain how you can pay off your loan. Most lenders will let you sell the vehicle on finance if you use the proceeds to pay off your existing loan. Depending on your loan, you may have to pay additional fees if you pay it off early. For example, suppose you used a different asset as security against your car loan or an unsecured personal loan to help purchase your car. You can sell it whenever you want, but you must continue making payments until your loan is paid.
Questions to ask before selling your car on finance in Perth :
To sell a vehicle on finance, you must first be able to answer the following questions:
- What is the balance on the car? Primarily, you must understand how much you still owe on the loan.
- How will you repay the lender? First, you must satisfy the lender by repaying the entire car loan, plus any early repayment fees and other costs. Before you decide to sell your financed vehicle, consult with your lender.
- How are you going to please the buyer? A few individuals may be reluctant to purchase a repossessed vehicle. You must state unequivocally that any outstanding debt is the buyer’s responsibility or that you will pay off any special financing.
- Is it possible for me to sell the car because of my loan? If you are using the vehicle as collateral in secured credit, you will not be able to use it until you’ve paid it off, depending on the terms of your advance.
Before you sell the car, you should check with your dealer about this.
How do I sell a car that has been financed?
If you want to sell a car that you still owe money on, follow the steps below:
Inform your lender:
You should notify your lender and discuss your options before selling your car. Depending on the terms of your loan, you may be required to repay the loan before selling the vehicle, or you may be able to arrange for the buyer to pay your lender directly. Your lender may also permit you to sell your car if the proceeds are used to pay off the remainder of your loan immediately.
Locate a buyer:
You are free to find a buyer once you have cleared the sale with your lender. You can choose to advertise the car online or through other media or find a buyer directly. Once you have found a buyer, you must notify them that the vehicle is being financed and explain what they must do.
Complete the sale:
You can finalise the sale once you have agreed on a price with the buyer.
Both the buyer and the lender should request that the payment be made directly, with you receiving any funds remaining after the remaining loan amount and any early repayment fees or other charges have been paid off. For example, if the buyer requests that you arrange payment with your lender, you must do so once the money is received.
Should transfer the ownership:
You should schedule a time to pick up the vehicle with the buyer. They are responsible for transferring the registration into their name, but you must provide proof of purchase and a notice of disposal to confirm you no longer own the car.
FAQs about selling a previously owned vehicle
My car includes a loan on it. Is it better to offer it secretly or through a merchant?
Both options are viable. You may be able to induce a much better cost if you offer it secretly, but the special fund is more likely to be a bother and turn off private buyers than on the off chance that you exchange it at a dealership.
Is it better to get a secured or unsecured car loan? What effect does this have on resale?
Secured advances that utilise the car as collateral have lower interest rates than unsecured advances, but offering a vehicle that’s still financed can be troublesome. Unsecured loans have higher interest rates but allow you to sell the car whenever possible. You would, however, be required to repay the remainder of your loan.
Please contact Premier Car Removal at 0406 996 661 / (08) 6252 8500 for assistance or guidance regarding an encumbered vehicle in Perth.
If you have an existing car loan and looking to sell the vehicle for cash, then it’s a must you should first clear the loan before you contact a buyer.