How to go about selling a car with an existing loan
There are a number of things you need to keep in mind when selling a car. For instance, does the insurance need to be cancelled or transferred? And what about the technical inspection? And, more importantly: what if you haven’t fully paid off your existing car loan yet?
Tips for selling a car with an existing loan
- You can only sell your car if you repay your loan in full, because your car serves as collateral for your loan. This means that the lender can have the car repossessed if you are no longer able to repay your loan.
- If you repay your loan in one go, keep in mind that you will be charged a reinvestment fee. This fee is charged by the lender when you repay the loan in full as a lump sum to cover the interest it had counted on receiving from you over the full term of the loan.
How much is the reinvestment fee?- For contracts with an end date more than a year from the current date: up to 1% of the amount you pay in one go
- For contracts with an end date less than a year from the current date: up to 0.5% of the amount you pay in one go
- Contact your lender if you want to repay your loan as a lump sum. If you’re a KBC customer, you can arrange this in a few easy steps in KBC Mobile or %product.touch%%.
- If you’re already planning to buy a new car and need financing for it, you can also use the app to apply for a new loan.
How to sell your car: preparation is key
- When you’re selling your car, you need to have it inspected for sale. If you pass the inspection, you will be issued a Car-Pass (charges apply); a document you are legally required to give to the buyer of your car. If you are unable to provide the buyer with a Car-Pass, the latter has the right to terminate the sale.
- You don’t need to have your car inspected if you’re selling it through an official dealer or if it will be exported. You can request a thorough inspection of your car by VAB, if needed.
- If you’re selling your car privately, be sure to draw up a sales contract (in duplicate) between you and the buyer, and provide the latter with the required documents (see sales contract).
What about the car’s insurance?
Your car must remain covered under insurance as long as it is used on public roads – including when a potential buyer test drives the car to ensure that you are covered if they cause an accident during the test drive.
If you already know the date when your car will be sold, be sure to notify your insurer to have your contract terminated. If you’re buying a new car, contact your insurer to have your insurance contract updated. If you’re a KBC customer, you can arrange this online in a few easy steps.
Considering buying a new car?
When you sell your car, you can use the proceeds to pay off your existing loan and then take out a new loan for your new car.
Did you know that we offer a range of loans for different car models? From new petrol cars to electric vehicles and used cars – KBC has the right loan for you.
