Selling a Financed car in Ontario
Selling a car that you owe money on is a very common thing. You HAVE TO clear the money owing on the car before you can transfer it. You may owe less than you sell the car for, which is called having “Equity”, or you may owe more than you sell the car for, which is called “negative equity”. So, If you financed a vehicle 3 years ago, currently owe $20000 and your vehicle is sold (or valued) at $14000, then you would have a negative equity of $6000.
Often times, they want or need to sell it, but just don’t have $6000 sitting around to clear the lien on the vehicle. If you can relate to this, do not feel bad or trapped as this is a VERY COMMON circumstance and there are a few ways around it.
Option 1 for selling a vehicle in Ontario you owe money on:
Acquire another separate non-secured loan to clear the balance.
This is a good option for those of you with good credit, a low debt service ratio and are not purchasing another vehicle. You simply take out a loan, pay off the outstanding amount on the lien and sell your car. If you are selling it privately, you will want to go to your lien holder (dealership or bank) in order to have them pay out your lien directly before signing over ownership.
Option 2 for selling a vehicle in Ontario that you owe money on:
Roll the negative equity into anothers vehicles loan.
This is usually the preferred option as car interest rates are usually lower than the rates you will be able to attain from your bank. However, one must be careful when using this method, as dealers will allow you to roll a lot of more negative equity into your loan than you should. You do not want a $40000 loan on a car that is worth $16000 the second you drive it off the lot. If you are using this method, it is definitely better to purchase a USED car to avoid the rapid depreciation of a new car. Eliminating the added instant depreciation that would be incurred from your new car purchase should leave you in a financial position that will be a MINIMUM of $5000 better than if you bought a new car.
If you want to minimize the amount of money you will lose on your car, you need to sell it for as much as possible. This means you can either attempt to find a private buyer for your vehicle, or contact us at CarbonOak to get the highest possible amount for your vehicle before selling it. CarbonOak pay you considerably higher than what a single dealership or industry purchaser will offer you. CarbonOak will clear your lien for you and make the entire transaction hassle free. Contact CarbonOak today for a free, no hassle, instant quote for your vehicle.