How to sell a financed car: negotiate and pay off your financing

Many people have questions about how to sell a financed car, whether it is possible, how to handle the documentation, among other things.

Can I sell a financed car?

The first question to ask yourself is whether you can actually sell the financed car, and the answer is it depends.

If the amount you receive for the car is less than the balance of the financing, the ideal is to cover the difference and pay off the loan.

However, if the value is higher, you can use the difference to pay off the car and have money left over.

Therefore, it is important to understand that when the car is financed, the bank or finance company that made the loan retains possession of the title.

Therefore, the transfer of ownership to another person can only be made after the debt has been paid off with the bank.

This means that to sell the financed car you will first need to pay off the financing, so that it will be possible to transfer the car to the new owner's name.

Can I sell the financed car without having to pay off the financing?

Another option for selling a financed car if you can't get the full amount to pay off the debt is to transfer the financing.

To do this, it is important that you have some information such as the value of the car and how much you still owe the bank, this way you can start the process of selling a financed car.

Therefore, with this information in hand, the first thing to do is to contact the bank and request financing portability.

This will allow you to transfer the remaining installments of the financing to the car buyer, thus making them responsible for paying the remaining installments.

However, it is important to remember that this process requires bank approval of the new owner.

What does it take to transfer financing to the buyer?

In practical terms, it is important to understand that the financing will remain in effect, but the owner will change.

Therefore, the bank or finance company will analyze the new buyer just as they did when you purchased the financed car.

In other words, generally speaking, the bank will be practically providing “new” financing and will request the same documentation from the initial process to perform the credit analysis of the new buyer.

However, it is important to remember that when selling a financed car by transferring it, the debt will be in accordance with current legislation.

Therefore, a new contract will be drawn up and signed, in which the current rates will be in effect, not those of the first contract. Therefore, the value of the installments may be higher or lower for the new buyer.

It is worth remembering that if during this process the bank or financial institution does not approve the financing for the new buyer, the transfer cannot be completed.

This way, you will need to look for a new buyer or pay off the installments to sell the financed car.

Should I sell a car financed with a Drawer Contract?

You now understand all the details about selling a financed car in the safest way.

However, there is another way to sell a financed car which is known as “paying in name”.

Therefore, in this case, the seller makes a “drawer contract”, which allows the new buyer to take over the payment of the installments in their place without the need for debt portability.

Looking at it this way, it seems like a more practical way, doesn't it?

However, it is worth remembering that there are some aggravating factors behind this modality.

Since the car is still in your name, if the new buyer of the financed car receives fines, commits infractions, or even fails to pay the installments, you will be the one penalized.

So it is important to emphasize that depending on the infractions committed, you may even be subject to legal proceedings for an act you did not commit.

Therefore, it is worth considering whether it is really worth selling a financed car in this way, as there may be numerous aggravating factors.

Another important factor is that even though it is a notarized document, the contract can be considered an unofficial document.

Therefore, without legal legitimacy, the contract is only based on trust between the seller and buyer.

What is the correct way to sell a financed car?

As mentioned above, when selling a financed car, it is important that you know the remaining amount to pay off the debt, and if you have any doubts, you can confirm with the bank or finance company.

Another important point is to check if there are any outstanding debts on the financed car, such as taxes, fines, late documentation, or any other restrictions that could prevent the transaction.

Therefore, if there are any restrictions, you will need to pay off the amount before selling the financed car.

Or another option is to offer a discount to the new buyer, so that he can pay off the restrictions at the time of transfer.

How do I know how much to sell a financed car for?

Now that you know how to proceed with transferring your financed car and all the precautions that must be taken, it's important to price your car.

To do this, you will need to evaluate some points to know how much to sell a financed car for.

Therefore, first of all, it is important for you to know that most of the time the way a car is evaluated tends to follow a standard throughout the country.

However, this is not a rule, and there may be variations from one state to another, for example.

But this standard is what basically allows the price of cars to not suffer a large variation, this allows a certain margin of safety.

In this way, we will list the main factors that you should take into consideration when selling a financed car.

How to assess the value of your car:

Evaluate the price of the car based on the calculation of FIPE Table.

However, keep in mind that the table does not present a fixed price for the vehicles, but rather, it highlights the results of a national survey and presents a market average.

Understand the difference between a used and a pre-owned car

A used car is not necessarily a pre-owned car, there are some points that will make a difference when selling a financed car.

For example, the year of the vehicle, to be considered a pre-owned vehicle it must be less than 3 years old.

The mileage to sell a financed car as pre-owned is less than 60 thousand kilometers, with an average of 20 thousand kilometers per year.

And the number of owners, because for it to be considered pre-owned the car must have only had one owner.

Pay attention to the car's conservation conditions;
Evaluate the visual aspects of the car;
Be aware of the car's supply and demand conditions;

These are some important factors that you should consider when pricing and selling a financed car.

Documentation required to transfer financed car

The documentation required to transfer a financed car may undergo some changes when the buyer's and seller's addresses are in different municipalities.

However, transfers made within the same municipality are simpler.

For example, in São Paulo, to transfer the CRV (Vehicle Registration Certificate) to the new owner of the financed car, the following documents will be required:

CNH (National Driver's License) – copy and original or some identification document with photo;
Proof of residence within the last 3 months in the name of the buyer of the financed car or 1st degree relative;
Original CRV (Vehicle Registration Certificate) of the previous owner, filled in with the buyer's name and with notarized signatures of both the buyer and the seller;
Proof of payment of the new CRV issuance fee, which must be paid at bank branches before the transfer is made;
Proof of payment of debts (if applicable) such as IPVA, licensing and fines;
Inspection report made by DETRAN;
RENAVAM form completed in duplicate.

In the case of transferring a financed car between municipalities, the documents are basically the same, however there are some additional procedures.

It will be necessary to issue a new CRV, new registration and consequently change the plate.

Conclusion

Selling a financed car is an option for those who are in debt and need to pay off or transfer the debt, or even for those who want to change cars and make a new financing.

Therefore, it is important to evaluate all points such as sales value, transfer of financing and vehicle ownership.

Likewise, to sell a financed car, it's also important that you're up to date with all the car's expenses and documentation, so you can complete all the procedures in the best possible way.

So, take advantage and follow all the tips to sell a financed car without complications.

So evaluate all the possibilities and good luck selling!

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May 16, 2023