EN
MY
How to sell car with loan in Malaysia? There are many reasons why some individuals make the decision to sell a car with a loan still outstanding. Some individuals sell a car with a loan because the car is rarely used to reduce financial burden and monthly commitments. There are also individuals who make the decision to upgrade or trade-in their old car for a new one due to an increase in family members, and so on.
Selling a Car with an Outstanding Loan: Easy Way to Sell a Car that Still Has an Outstanding Loan with the Bank
How to sell a car with an outstanding loan still owed to the bank? This article will briefly share the steps to sell a car that still has an outstanding loan, to facilitate the process of selling your car.
Basically, you need to familiarize yourself with the procedure of trading in or selling a car with an outstanding loan. This will prevent you from being scammed or selling your car at a price that is too low.
1. Check the Car Loan Balance
The first thing you need to do before selling a car with an outstanding loan is to check the outstanding car loan balance with the bank. You can go to any branch of your car loan bank to check and get a full statement of the latest outstanding loan balance. This will allow you to make a full settlement before you can sell the car with an outstanding loan.
In addition, it is important for you to know the period of time and the percentage of penalty that may be imposed on you before making a full settlement. Some banks will impose a penalty if the loan is settled earlier than expected. This is because most car loans come with a lock-in period. The bank usually allows the process of selling a car with an outstanding loan after five years (for a nine-year loan period) or after four to five years (for a seven-year loan period).
2. Check the Current Market Price of the Car
In addition, you also need to know the current market price of your car before selling a car with an outstanding loan. You can check the current market price of your car model by:
- Asking the bank for the current market price of the car;
- Conducting a price survey at any used car dealer; or
- Searching online through any used car buying and selling platform in Malaysia;
- Both the outstanding car loan balance with the bank and the estimated current market price of the car are important to avoid any losses.
Assuming that the agreed selling price of the car with an outstanding loan by the buyer is lower than the outstanding loan amount with the bank. You need to spend extra money from your savings to pay for the shortfall.
3. Trade-In Old Car: Apply for Car Loan Before Selling Car with Loan
If you choose to trade-in your old car for a new one, it is advisable to apply for a car loan with the bank first. Avoid making the decision to trade-in your car before your car loan is approved to prevent any headaches.
In addition, prepare a provision for a down payment of at least 10 percent of the price of the car you want to buy.
4. Car Service and Maintenance
After setting the selling price and applying for a loan for a new car, the next step you need to do is to find a buyer. Before selling your car that is not fully paid, it is recommended that you consider the following to increase the resale value of your car:
Car Service
Proper car care and maintenance can save you money in the long run. It can also avoid unnecessary repair costs.
If necessary, replace any damaged car components such as car wipers, brakes, dead car batteries, and so on.
Usually, potential car buyers tend to offer a higher price for a car that is in good condition.
Exterior of the Car
Potential buyers are also usually interested in cars that have a good exterior appearance. A clean-looking car, with no faded car paint, well-maintained car, and so on, can attract a higher selling price.
In addition, check the car rims and tires and replace them if they are bald or worn out. Also, repair any dents, scratches, and so on, on the car body.
Interior of the Car
The cleanliness of the interior is also important for some buyers. Before selling your car that is not fully paid, clean up any dirt and food residue inside the car, and so on, to attract buyers.
5. Determine the Selling Price of the Car
Next, you need to determine the appropriate selling price of the car depending on the remaining amount of the loan with the bank. It is important for you to set a selling price that is suitable to maximize your profit.
For a car that is not fully paid, you generally need to make a full settlement first.
Full Settlement for Selling a Car that is not Fully Paid
What is full settlement? Full settlement, in simple terms, refers to paying the full (settlement) amount of the remaining loan with the bank.
You need to pay off all the remaining loan balance of the car first before you can obtain another loan for your new car.
To determine the selling price of the car, you can look at the method of determining the selling price of the car as follows:
i. Car Market Price is Higher than the Remaining Loan Balance
Assume that your car loan balance with the bank is RM20,000. Meanwhile, the buyer offers to buy at the current market price of the car, which is RM25,000.
If the full settlement amount is higher than the price offered by the buyer, you do not need to add any money to make a full settlement with the bank.
This is because the selling price is higher than the remaining loan balance. You will receive a surplus payment of RM5,000, which can be used for other purposes such as a house deposit, down payment for a new car, and so on.
ii. Car Market Price is Lower than the Remaining Loan Balance
However, assuming that the current market price of the car is RM25,000 and your remaining loan balance with the bank is RM28,000.
If the full settlement amount is lower than the selling price, you need to use your own savings to settle this loan balance.
This means that if you agree to sell at that price, you need to top up RM3,000 on your own to settle the loan balance.
6. Advertise Car Sales
If you want to sell a car that is still under your own payment, you can advertise it on social media or online car trading portals in Malaysia. In addition, you can also visit any used car sales center. Usually, the agent will handle all matters related to the sale of the car that is still under your payment on your behalf.
Tips for Buying and Selling Used Cars in Malaysia
For those of you who are considering buying a used car, here are some tips that you can follow to ensure that you get your dream car with the best quality:
i. Do a Test Drive and Evaluate Yourself
Usually, buyers who are interested in buying a car will set an appointment for a test drive of the car they are interested in. The quality of a used car can sometimes only be evaluated when you experience driving it yourself.
ii. Choose the Right Car Loan
If the buyer is interested in buying a car that is still under payment, the buyer can obtain a loan from their preferred bank. The bank will usually approve the car loan depending on the borrower’s salary eligibility, existing loan records (CCRIS and CTOS records), and other factors.
iii. Understand the Types of Car Insurance
Car insurance plays an important role in protecting drivers, passengers, and others involved in accidents. It helps to reduce the financial burden of repairing damages, injuries, or deaths in case of an accident.
Basically, car insurance is divided into three types, namely third party insurance, fire and theft insurance, and comprehensive car insurance (first party insurance).
7. Prepare Important Documents
Whether you want to trade in your old car or sell a car that is still being financed to get some extra cash or reduce your monthly commitments, you need to prepare important documents to facilitate the buying and selling process.
You need to prepare documents that are usually required such as:
- Car grant or vehicle ownership certificate (VOC);
- Identity card or passport;
- Import permit (AP) (if applicable);
- Settlement of hire-purchase agreement (for cars with outstanding loan amounts);
- Purchase invoice (if the car is purchased in cash);
- Third party authorization letter (if applicable).
8. Carry Out Puspakom Inspection
If the buyer agrees to buy the car that is still being financed, you need to carry out a car inspection at Puspakom. Puspakom inspection is a common thing that needs to be done by all private vehicles that want to transfer vehicle ownership.
Basically, Puspakom inspection is carried out to protect potential buyers from buying or owning illegal vehicles such as cut-and-join cars.
Buying a Fully Paid Car
If the buyer agrees to buy a fully paid car in cash, the buyer only needs to pay the agreed amount to the seller.
Then, the car will be taken for inspection at Puspakom (B5 form) before the car ownership transfer process can be done at JPJ. The Puspakom inspection fee is usually around RM130 (RM30 for Puspakom inspection, RM100 for ownership transfer process).
Buying a Car that is still being Financed
However, if the buyer wants to buy a car that is still being financed, the buyer needs to apply for a car loan from the bank first.
Usually, the bank requires the buyer to carry out a Hire-Purchase Inspection at Puspakom (B7 form). An additional fee of RM60 is charged for this service.
This process usually takes a long time because the buyer needs to wait for the hire-purchase loan approval first. It also involves a lot of paperwork.
The buyer’s bank will pay the outstanding loan balance to the seller’s bank before the car can be sold.
9. Transfer Car Ownership at JPJ
After completing all the above processes, only then can you transfer the ownership of the car at JPJ or online. The process of transferring car ownership is actually very easy and does not take a long time.
You can use a third-party service or do the JPJ ownership transfer process yourself at the JPJ counter. What is important is to bring the necessary documents for car ownership transfer such as:
- Identity card;
- Car grant;
- Puspakom inspection form, and so on.
Renew Your Car Insurance with Qoala for Peace of Mind
Hopefully, this sharing of how to sell a car that is still under financing can help make the process easier for vehicle owners. Additionally, if you want to get comprehensive car insurance coverage for your car, visit Qoala’s website for more information. Qoala is the most comprehensive and best online insurance comparison platform in Malaysia. You can get the best car insurance in Malaysia with an easy and fast process, at attractive and reasonable prices.
