How to sell a car that you still owe money on

How To Sell A Car That You Still Have A Loan
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Selling a car is already a complicated and tedious process. It becomes even more intimidating if there is still an existing financing on the vehicle you’re selling. Fortunately, it’s a relatively common transaction – people and dealers do it every day. While it is definitely easier if your vehicle is already fully paid-up, you still have several options available when it comes to selling a car with an existing financing.

There are two key steps to a successful sale:

  1. Pay off the remaining vehicle loan – possibly with the sales proceeds from your buyer, and any extra funds that you bring to the table (if your car loan is higher than the transacted price).
  2. Transfer the vehicle ownership – The Land Transport Authority (LTA) of Singapore have recently implemented ways for you to transfer the vehicle to your buyer in a safe – and comfortable – way for both sellers and buyers.

The process will depend on several factors, including who you’re selling to (Is it a dealer or a private buyer?) and where your loan is held. Here’s a basic overview of how to sell your car.

First – Get an official Full settlement amount

First, ask your bank or financing company how much you need to get rid of the loan and sell your car. Ask if there’s anything else you need to know about, such as prepayment penalties and an estimated processing time for filing the “FORM B”. The typical time line for the lodging of “Form B” is between 1 to 3 working days (for most Banks) and up to 5 working days (for financing companies).

What is form B?

When you apply for any financing options for your car, the Bank/Financing company would lodge their interest in a vehicle arising out of a grant of financing over that vehicle in accordance with the Code of Conduct using “Form A” .

“Form B” does exactly the opposite. In the event that you have fully settled/redeemed your existing financing on the car, it allows the Bank/Financing companies to discharge your vehicle from the Hire Purchase, Finance & Leasing association of Singapore (HPFLAS) systems.

Most direct buyers will not pay unless you can show that “FORM B” has been lodged – via, so this is a critical step.

Pay off the loan yourself if possible

If possible, the most ideal thing to do is to pay your loan off before selling the car. That way, you are clear to transfer the car ownership as soon as you receive payment from the buyer of your car. This is most attractive to buyers, so you’ll have an easier time getting the price you want. If you still owe money on your car and clearing the financing on your car is hassle, some buyers may be hesitant to buy.

While this is ideal, we understand that not all Singaporeans have the ready liquid cash to pay off the loan themselves. What if you are not able to pay off the loan yourself first?

Trade in with a dealer (OTUA FLASH-SALE)

  1. Easiest way to sell: Trading in your car is easier than selling it to an individual. Dealers commonly handle transactions like this, and they’ll deal with all the paperwork. After paying off your loan ahead of time, it’s the second best option (in terms of convenience). You might even be able to sell to a dealership without buying one of their cars – some dealers pay for used cars just to sell them on the lot. OTUA Flash-sale allows you to get the highest dealer offer price in just 1 hour at the comfort of your own couch.
  2. Less money: The ease of selling your financed car to a dealer does not come for free. You’d probably get more for your car if you choose to sell it to a direct buyer (through classifieds or OTUA Connect!).

Private Buyers Who Trust You

You’ll almost always get the best price for your car if you sell to a direct buyer. If the buyer trusts you, it may be as simple as selling the car with the understanding that the “FORM B” is not yet available. This is somewhat risky for the buyer, but if you document everything, it’s not the worst idea in the world.

You can hand over the keys, pay off the loan with sales proceeds, and transfer the vehicle ownership over after you get it from your lender (which may take up to 7 working days). You can also ask your buyer to pay the lender directly if that feels more comfortable, but this still requires substantial trust.

While this is great for the seller, OTUA does not encourage such practices as the potential implications can be huge for the buy in the event that the seller goes back on his words. Also, if the buyer is taking a loan for his purchase, this option is not available.

How otua can help you

Another option is to use a neutral intermediary (OTUA) to make sure that the deal goes smoothly. Escrow services can protect both buyers and sellers – If the buyer doesn’t pay, you keep your car. If you don’t transfer the car ownership, you don’t get any money.

This is especially crucial if your buyer chooses to apply for any financing to buy your car. The banks and finance companies will never pay out the “loan amount” until the car has been successfully transferred to your buyer.

OTUA will assist in the settlement of your existing loan (up to the transacted price) for a small fee of $200(or 1% of your settlement amount whichever is higher) and ensure the smooth sales journey for both buyer and seller.

Find out more about how OTUA is the EASIEST and FASTEST way you can sell your car for the MOST amount of money –


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