Selling A Vehicle That Still Has Most Of The Money Owed

originally posted by: Ghost147

originally posted by: rickymouse
Just sell it and pay off the loan. You can pick up a cheap car temporarily till you get on your feet again. Check with relatives or good friends that are getting rid of an older car.

I was under the impression that it's difficult to sell a vehicle that still owes money on it?

And wouldn't the sales price determine if I could pay off the loan? If the vehicle sells for less than what I owe, then I would be without a vehicle and still making payments, wouldn't I?

Here's what to do;

Step 1; Contact your finance company and ask for a final payout figure. They will tell you it is valid for xyz days (interest and further payments affect the final number so it is a ball park figure until you have the hard cash and are ready to pay)

Step 2; Determine the private market value of your car - look on whatever online sites are used in Canada. If your car is going for more or equal to what you owe on average, advertise it.

Step 3: The finance question. If people ask whether it has money owing on it, be open about it and even ask them to accompany you to the loan office to pay the vehicle out. It will provide the new owner with peace of mind that the repo man will not come chasing after them.

Alternative option;

If the payments really become too much for you, you have the option of voluntary reposession. This is far from ideal, but it basically means you take the car to the loan provider and hand them the keys back and they sell it off. They will probably only auction it off to get their money back as quickly as they can and you will still be left owing any shortfall from what they get from the sale of the vehicle and your pay out figure.

originally posted by: pavmas
a reply to: Ghost147

Hi, this is Uk law which is similar to Canadian law so read the contract. In the UK any good you take on HP can be handed back if you have made over 50% of payments. for instance if you buy a car over 36 months and have paid 19 payments you can just write to them and tell them to pick it up as you no longer want it and under terms of the contract ( which section) you are ending the contract and returning the good. I know this is not ideal but if you can't pay they will end up getting the car back and adding costs. I know you are a bit off the half wage stage but it you can somehow manage the payments then hand it back after half is paid you maintain your credit rating etc and can get another car when things pick up. Finance companies do not like it when you exercise this right so keep all receipts. I once handed a printer back and 3 years later they sent a debt company but I had the receipt and they asked me to send it them, I said no way come to my door and I will show you it or just take me to court and I will produce it there' but I have to advise you that I will be charging costs as the reciept is up my loft and I am disabled and cant get up so I will be hiring a secretary to do it and do the paper work so expenses will be in the region of £600 (printer was £170) I stated just because you cant get your paperwork in order hats n my problem. You can legally hand anything back on finance after you have paid 50% I actually think its 51% leaving 49% which gives you the right to hand it back, if you bought a pc and its less than half price and better spec than what you paid you should check your agreement, They like to hide this bit of consumer protection.

This may be a possibility considering I'm selling my house at the moment, and when it sells I could potentially end up making a decent amount, thus being able to pay off 50% of the vehicle. Thanks for the knowledge.

I'll look into it in Canada for the specifications here.

If you have a lien on the car, you have to get permission from the lien holder to sell the vehicle, I think it's called a lien release.

www.cars.com...

a reply to: Ghost147

There's absolutely no way in hell you're going to be able to privately sell your vehicle for the amount you still owe on it. Yes, there's a sucker born every minute, but the chances of you finding that sucker in the time frame that you have left (one month) before you go completely broke with no more EI cheques coming in, are pretty much next to nil.

A vehicle will depreciate in value anywhere from 20-30% per year. The minute you drive off of the dealership lot with a brand new vehicle, your car has already depreciated anywhere up to 20% before the two front wheels even hit the street from the dealer's lot. Not to mention the fact that you almost always pay more for a vehicle at a dealership than what the true book value actually is (mark up, seller's commission, admin fees, etc etc), so you're already paying more for it than what it's worth the minute you sign at the dotted line too.

You can check online the book value of your vehicle to verify for yourself... just google "my car's book value".

The easiest thing for you to do is to pick up the phone and call whoever is financing your loan for the vehicle, tell them that you can no longer afford to make the payments and what are your options to get out of your loan to them (or if they have any other options on what you can do). Most banks and finance companies are more than willing to work out some sort of deal with you to stay in debt with them, so they will usually try to work out some sort of a new re-financing deal (if it's do-able for you and them).

But you have no income coming in, so chances are they're going to want to repo your car... which means taking a hit on your credit rating.




Another option before calling your car finance company:

Unless you can strike a deal with your bank and get them to grant you a loan to consolidate all of your debts into one large loan (greatly reducing your monthly payments for everything) which would mean keeping your house and using it as collateral since it's all you have of value left, then there's really not much else you can do short of claiming bankruptcy and wiping the slate clean. But your chances of your bank granting you a consolidated loan are not so good right now because, again, you don't have a steady income coming in... unless you get yourself a couple of jobs showing you have an income to make those monthly payments before approaching the bank for a consolidated loan.



In a nutshell:

The only way for you to save your credit rating is to find yourself one or two or three jobs to keep a steady income flowing in before your EI runs out. Once you have a steady monthly income flow, you have many more options (in terms of refinancing everything) to keep yourself from going bankrupt and losing everything.