It is now possible to take out a loan almost anywhere and for almost anything. This also applies to buying a car. You can buy a car on credit at any dealership, or you can take out a personal loan for the purchase. There are quite a lot of options, but often car enthusiasts are concerned with the question of what to do when they still have a loan, but want to sell the car.
The reasons can be very diverse, from solving financial problems to purchasing a new, more convenient and modern car. In our article we will tell you whether it is possible to sell a car that is pledged. In addition, we will consider the nuances that may be associated with this. And most importantly, we will tell you how to sell a credit car safely and legally.
Many car enthusiasts are stopped from selling their car by the fact that when taking out a car loan, the Vehicle Passport is kept by the bank. However, for the most part it doesn't play that important a role, as far as one might think at first glance. There are quite a few ways to resolve the issue of sale, which can be divided into several options.
Ways to sell a car that is pledged:
- Standard sale with the participation of the bank as one of the parties;
- Selling using intermediaries;
- Renewal of an existing loan directly to the buyer;
- Applying for another loan to pay off the balance available on this car.
There is, of course, another option with selling the car by proxy. However, in this case, the buyer will not be able to register the car in his name, and the transport tax will come to your name. You will remain the owner of the car, which means you will have all the responsibilities of a car owner.
The choice of sales method directly depends on the circumstances, the amount of the remaining debt on the car loan, as well as other nuances. In order to decide on the method that is most convenient for you, we recommend taking advantage of a free consultation with a lawyer. This will save you from various problems in advance and will help you sell your car quickly and easily.
Sale with bank participation
This method can be safely called the safest for all parties involved in the transaction. This fact makes the sale of a credit car with the participation of a bank the most popular method. Main it the principle is an agreement with the bank, under which you will deposit the proceeds from the sale of the car to cover your existing debt.
Before you start preparing documents, You will need to contact the bank and find out if this is possible.. You can contact one of the bank branches, or simply call the hotline. It is necessary to obtain prior consent for such a sale in order to act with confidence in the bank’s consent. If you received it, then The sales process will look like this:
- Submitting an application to the bank to carry out such an operation;
- The bank gives its approval, after which accounts are opened to sell the car. However, this depends on the bank; existing accounts can be used. One of them will receive an amount that will be used to cover the remaining debt. The difference that remains after closing the loan will be transferred to your account;
- The buyer will need to deposit funds into a bank account, after which it is the bank that distributes them, taking into account the existing interest on the debt. That is, it makes early repayment;
- The deposit on the car is removed, there are no longer any restrictions on sales. Among other things, as already mentioned, the bank transfers the remaining funds to your account, and you can freely dispose of them at your own discretion;
- A car purchase and sale agreement is drawn up. The following is the standard procedure for re-registration of a vehicle. Thanks to new simplified systems, it does not take so much time.
The reason for the popularity of this solution when it comes to selling a credit car is also due to its overall simplicity. All that is required of you is to submit the appropriate application to the bank, after which almost everything will be done by the bank itself.
Before using this method, check your existing debt balance. Despite all the attractiveness of the option with the participation of the bank, it is only suitable for those who have a debt balance less than the sale price of the car. Otherwise, the final amount will simply not be enough to pay off the debt, and the car will remain pledged.
How to sell using intermediaries
The services of intermediaries when selling a car can be used in various situations. In some, unfortunately, even without your desire. If we list all possible legal options for mediation, they consist of:
- Bank services if he provides mediation services for cars that are pledged to him;
- Trade-in opportunities at various car dealerships who work with credit cars;
- Works of the Federal Bailiff Service in the presence of enforcement proceedings.
The latter applies precisely to the case when the sale of a car is carried out without your desire. Bailiffs put vehicles up for special auction in order to cover the existing debt with the proceeds. However, let's get back to the good stuff and talk about how to sell a car on your own initiative.
If you do not take into account the FSSP authorities, then for the remaining options it is better for you to first contact your bank. The fact is that almost every bank has its own auctions where you can put up a credit car for sale. You can clarify not only the possibility of putting it up for sale, but also all other questions that interest you. After this already it makes sense to contact car dealerships that can put the car up for sale.
In both cases, the transaction will be carried out without your direct participation. However, before doing this, you will need to fill out some documents and familiarize yourself with the terms of the sale. After the actual sale, the funds will be transferred to the bank, where the debt will be covered. The difference will be refunded to you.
The main and main disadvantage of such a sale is that the car will be put up for auction at a reduced price. On average, the difference between the market value and what appears at the auction is up to more than twenty percent. Considering the size of the total amount, this is a very significant loss of funds. However, this method is no less reliable for both you, the seller, and the buyer.
Sale with transfer of credit to the buyer
It is not as difficult to find a buyer who is ready to buy a car on credit as it is to find one suitable for the bank. The difference is that, in addition to desire, the buyer must meet the bank’s criteria. That is, he must be a worthy replacement for the borrower in the loan agreement. He will be checked in the same way, his income, expenses, and credit history will be clarified. Only after this will it be possible to re-register.
If the buyer agrees and meets the bank’s requirements, then you can safely contact the bank itself. You will need to write an application to re-issue the loan to another person. Usually for such a statement you need to collect exactly the same package of documents as for obtaining a loan initially. When the application along with the required papers is submitted to the bank, you will need to wait for a response.
If the answer is positive, the loan agreement is redone, the buyer becomes the borrower, you are released from the debt, and on this day you re-register the car. It is noteworthy that if the amount of debt is less than the cost of the car, then the difference is transferred between you and the buyer as agreed. Whether it is cash or transfer of funds to an account does not matter.
Not every buyer wants to bother with re-issuing a loan agreement, much less collecting documents. Usually they just take out their own car loan, avoiding such complications. Plus, the buyer needs to meet the bank’s requirements, which is also a rather difficult task when finding someone willing to buy a used car.
Applying for another loan to cover the debt
This method could be called simple, if not for the nuance that the new loan must still be approved. If you apply for a loan at the same bank where your car is pledged, you can specify the purpose of obtaining a loan to cover your existing debt. With this option the bank agrees in most cases.
After you receive a loan and pay off your car loan debt, you can safely sell your car. Using standard
The borrower faces the question: is it possible to sell the loaned car? It is possible, but you need to understand that this is a rather complex and lengthy process.
Firstly, you need to decide on the feasibility of selling the car. If the borrower purchased a car with a small down payment or no down payment at all, then the result of such a transaction will only be financial losses. This is due to the fact that, when leaving the showroom, the car loses 10-15% of its value and another 7-10% for each year of its operation.
A lot of the borrower's expenses will also be associated with repaying the body of the loan itself, interest on it, commissions, insurance, etc. It becomes obvious that it is impossible to sell the car at a price that could repay the loan and cover all costs.
But, if the down payment on the credit car was substantial and the balance of debt on the loan is 20-25% of the residual value, then as a result of selling the car, the borrower will definitely be able to repay the balance of the debt to the bank and still have money.
Secondly, the borrower needs to decide how to sell the loan car. But before you do this, you need to contact your bank and notify it of your intention. As a rule, banks do not object to such transactions because they do not need bad debts on loans, because the borrower can simply stop repaying his debt.
Let's look at the main ways of selling mortgaged cars.
Method number 1. Independent sale
Borrower on one's own finds a buyer for his credit car and together with him applies to the bank with a request for early repayment of the loan. Some banks stipulate in loan agreements the payment of a commission for early repayment of debt.
The buyer repays the loan from the seller-borrower by transferring funds to the bank's current account. The bank removes the car from the collateral register. The borrower, having received the vehicle passport (PTS), applies to the traffic police department to deregister the car, and then a car purchase and sale agreement is concluded.
Plus– the loan debt is fully repaid at low cost
Minus– finding a suitable buyer can take a lot of time
Method number 2. Selling a car with the help of a financial institution
When the balance of the outstanding debt approximately equals the market price of the car, the borrower can try to delegate the sale of the car to the bank.
To do this you must notify financial institution about the inability to repay the loan.
In this situation, the bank itself will look for a buyer, set a price for the car and sell the collateral. But it is necessary to take into account the fact that if the money from the sale of the car is not enough to pay off the loan, the borrower will have to pay extra and still repay the debt.
On the one hand, it is not profitable for the bank to sell a credit car at a reduced price, because it is unknown whether the borrower will agree to pay the difference between the proceeds from the sale of the car and the balance of the debt, which will entail the emergence of a new problem loan. But banks will not make every effort to sell the collateral at a higher price; the main thing for them is to repay the loan.
The bank places a pledged car on its website in the “Pledged Property” section, which, together with the keys and title, is registered at a special site. After the sale, money is transferred to pay off the debt.
Plus– all issues related to the sale of a credit car are resolved by the bank
Minus– as a rule, the price at which the bank sells a car is 10-15% lower than the market price
Method No. 3. Selling via auction
One of the popular ways to sell a credit car is to sell it through special auctions who carry out the sale of collateral. How does this happen?
The borrower and the bank put the car up for sale, and the highest bidder gets it. The car is deregistered and, together with the title, is transferred to the new owner, and the borrower repays the debt using the proceeds from the sale of the car.
Plus– the opportunity to sell the car at the highest possible price
Minus– if the car needs to be sold in a short time, you will have to reduce the price by 15-20%
Method number 4. Trade-in
Trade-in— these are services of car dealerships for the purchase of used cars. In this case, the car dealership is looking for a buyer.
The trade-in procedure is as follows: the borrower (owner) brings a loan car with keys and documents to the car dealership, the technical condition of the car is diagnosed, and the final price is determined.
When selling a car through the trade-in system, you will need to issue a power of attorney to the car dealership, which will repay the loan debt, and the borrower will receive a title. The bank prepares a tripartite agreement, and the car is deregistered with the traffic police.
Plus- a car dealership sells cars
Minus– showrooms, as a rule, lower prices for cars
Method No. 5. Car loan assignment
One of the ways to sell a loan car, and at the same time repay the loan, is re-registration it to another person, i.e. the buyer. In this case, the new owner of the car will repay the loan debt.
In other words, the buyer re-registers both the car and the loan for it. To do this, he needs to provide the bank with a package of documents necessary to obtain a loan. The car is deregistered and registered under the new owner.
It is necessary to take into account that the bank must like the buyer in terms of his solvency, which he must confirm with official documents confirming his stable and high income.
Plus– minimum investment of time and money
Minus– the buyer may not meet the bank’s requirements
Method number 6. Apply for a consumer loan
To pay off the remaining debt on a car loan, you can take second loan – consumer. Consumer loans are issued both secured by property and without it for any purpose by almost all banks. Having issued a consumer loan, the borrower pays off the debt on the car loan, receives a title and can safely sell his car.
Plus– repaying the car loan debt
Minus– new debt may arise, expenses may increase
Method No. 7. Sale by means of a power of attorney
Borrower (seller of collateral car) negotiates with the buyer about the cost of the car being sold. From this money an amount equal to the remaining balance on the car loan is subtracted. The seller takes the remaining funds and issues a power of attorney to the buyer to drive the car, and the buyer continues to pay the debt for it.
When the loan is fully repaid, the seller receives the title and re-registers the car to the buyer.
This is a risky way to sell a car and should only be done with a person you can trust. In this case, both parties are at risk. Problems that may arise with the traffic police, the insurance company and the bank will be resolved by the seller, since the car is officially registered in his name. The buyer's risk lies in the possible refusal of the seller to return the car after all payments.
Plus- minimum investment of time and money
Minus– the solution to all problems associated with the car will be dealt with by the seller, since it is officially registered in his name
Method No. 8. Exchange of loan for deposit
The borrower (loan car seller) finds the owner of the deposit and offers him an exchange. What does it mean? The borrower gives the car to the owner of the deposit, and he repays the borrower's loan using the deposit. All this can be done, provided that the loan and deposit are in the same bank, and the bank itself is problematic, and therefore deposits can be frozen and a temporary administration introduced.
Everything happens according to the following scheme: concluding a tripartite agreement, deregistering the car, removing it from the register of pledges, transferring the car to the owner of the deposit, writing off the amount of debt on the borrower’s loan from the deposit account. Banks are not very willing to make such transactions, despite the fact that as a result they have full repayment of loans by borrowers and disposal of debts to deposit holders. Banks love real money.
Plus– full repayment of the loan with a minimum of costs
Minus– it is very difficult to find such a deposit owner
Owners of credit cars should know that if they wish, they can always sell them. To achieve this goal, you need to consider all the ways to sell a car, weigh the pros and cons of each of them and settle on the most suitable option.
A car purchased with credit funds is not fully your property until the full amount of the debt is paid to the bank. You can use it, but if you want to sell, many problems and obstacles immediately arise.
The most common situation is when the title for a car, which is collateral for a loan, is kept in a bank. And if there is no original PTS, then it will not be possible to conclude a purchase and sale agreement. And even if in some crooked way you managed to keep the original title or “rescue” it from the bank until the loan is fully repaid, selling such a car without the permission of the lender is essentially illegal.
Why sell a “credit” car?
The person did not calculate his financial capabilities or circumstances changed: he lost his job, his salary decreased, he got sick, etc. And now loan payments have become a heavy burden for the family budget. In such a situation, it is better not to make late payments and try to sell the car before debts accumulate and your credit history is damaged.
Another reason for selling a credit car is an improvement in financial situation, when a person can afford a more expensive car. At the same time, there are not enough funds to repay the loan in a lump sum, but income allows for larger payments. Sometimes the need to maintain an image forces you to buy an expensive car.
There is a situation when a person simply comes across the opportunity for a profitable deal, for which he needs free money - and he decides to sell the car, without even thinking that it is collateral. Or a large sum is urgently needed due to certain circumstances: for treatment, to pay off a large debt.
How realistic is it to sell a credit car?
If you carefully read the loan agreement, then it is written in black and white that the sale of a car without the consent of the lender is prohibited. The wording may differ, but the essence remains the same. The bank does not want the collateral to change ownership. Accordingly, any transaction with such a car will be illegal and may be considered fraud.
However, any bank is not interested in clients accumulating arrears on their loans. The procedure for seizing collateral and its subsequent sale is a long and tedious matter. Therefore, there is always a chance to “agree” with the bank in an amicable way.
Actually, the purchase and sale transaction of a credit car can be completed through a bank.
How to sell a credit car through a bank
The simplest thing you can think of is to do nothing. In this case, after several months of delay, the bank will do everything for you: it will put the car up for sale, find a buyer, and formalize the purchase and sale. But the bank is interested in getting its money back as quickly as possible. Therefore, he will put a “junk” price on the car - as long as it is enough to pay off the loan balance, fines and penalties. By law, the bank must return the difference to the borrower. But will there be a difference? And if the proceeds from the sale of the car are not enough to “close” the debt, then you still have to stay...
The second option is to find a buyer yourself. If the buyer has enough cash and is ready to pay, the algorithm of actions is as follows:
- enter into a contract,
- go with the buyer to the bank,
- pay the loan balance by arranging early repayment,
- pick up PTS,
- transfer it to the new owner.
The difference stays in your pocket. And everything is legal. The bank cannot have any claims in principle. The only difficulty is to find a buyer willing to take a risk. After all, in essence, he gives money for a “piece of paper” - an agreement. But he receives the PTS after some time, perhaps even after a few days. To reduce the risk, the buyer goes to the bank and deposits money “with his own hands,” and at the same time makes sure that you have not deceived him at this point. In addition to the increased risk for the buyer, this is also unnecessary trouble. So, obviously, you will have to give in on price to compensate for the inconvenience.
If the buyer expects to buy a car on credit, there is nothing left to do but go to the bank and “transfer” the balance of the loan to it. The buyer will need proof of income, just like when applying for a standard loan. In addition, it is not superfluous to make sure in advance that the bank is, in principle, ready to accept this option. On the one hand, the bank is interested in getting its money. And if the loan becomes “problematic”, then obtaining them will be fraught with difficulties. On the other hand, the bank already has a borrower. And changing it is an extra waste of labor and time. So the decision will remain with the mortgagee bank.
Some banks are willing to consider another collateral instead of a car. For example, you are urgently “on fire” to sell a car you recently bought on credit. You come to the bank and offer to take out an apartment or a dacha as collateral. The optimal collateral in such a situation is real estate in which no one is registered - it is the most liquid. Having received the title in your hands, you sell the car at a good price, because now there are no obstacles to the sale. And use the proceeds from the sale to repay the loan, releasing your property as collateral. The method requires quite a long coordination and paperwork, but allows you to calmly select a cash buyer who is ready to pay the true market value of the car.
An easy way to sell a used car
The easiest way, suitable for those who have a small loan balance and no late payments, is to refinance. In this case, a consumer loan is usually taken out for a short period. With the money received, the car loan is paid off - and you are free to sell the car. The consumer loan is repaid ahead of schedule from the money received for it.
A variant of this method is to borrow from friends and acquaintances.
Advice. If you want to play it safe, you can first find out details about the possibility of refinancing, even get approval for a consumer loan, which is usually valid for about a month (sometimes less, you need to check with each bank). Then we look for a buyer, perhaps take a deposit so that we don’t fall through the cracks - and only then do we go for a new loan.
Selling a pledged car through a car dealership
There is another legal way to get rid of loan payments ahead of schedule by selling a collateralized car. For this purpose, the intermediary must be a car dealership. Sales are made using the trade-in system. That is, this method only works if you decide to sell your old one and buy a new, more expensive car. In this case, the car dealership is the guarantor of legality and correct execution of all nuances.
Having assessed your car and received an additional payment from you, the car dealership itself transfers the money to the bank and receives a title.
Some car dealerships were able to negotiate with specific banks on the sale of collateral cars. In this case, you can come to the car dealership and put the car up for sale; if the car dealership works with your bank, then it will resolve all issues regarding the loan without your participation. Minus - the car dealership will greatly reduce the price of the car; if you sell it yourself, you can get 15-20 percent more.
If the PTS is “in hand”
If for some reason the bank, when issuing the loan, did not take the original title from you, then you can take the risk and sell the car without informing the buyer that it is collateral for the loan.
The main thing in such a situation, having received cash, is to immediately run to the bank and make an early repayment. If information about the sale reaches the bank (and it will), you risk being accused of fraud, and this is already a criminal article (Criminal Code of the Russian Federation 159.1), which, by the way, provides for imprisonment for up to 2 years. Although in this case the court will most likely take into account the desire to repay the debt and you can count on leniency.
Attention. If, in order to sell a credit car to the traffic police, you received a duplicate PTS under a flimsy pretext, you won’t have to count on a lenient sentence - there is intent and planning of the crime.
In a word, any legal scheme for selling a car that is collateral for a loan is associated either with early repayment of the loan in various ways, or is resolved directly with employees of the mortgage bank. And it depends on the bank whether it is ready to give you the opportunity to sell the car yourself or will do it itself when you stop making payments.
A compromise option for selling independently is a long search for a buyer willing to take on additional risks and hassles, or selling through car dealerships with a loss of part of the car’s value.
Most people who purchase a car on credit know exactly from what funds the debt will be repaid in the future. But there are often times when life situations change dramatically, and not for the better.
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Is it possible to sell a car that is pledged to a credit institution, and what needs to be done for this?
Possible reasons for selling a car
There may be several reasons for selling a pledged car:
- inability to repay the loan properly due to current financial circumstances, such as job loss, salary reduction, and so on;
- the opportunity to purchase a new car;
- formation of more loyal offers in the credit product market.
In each case, you will have to perform certain actions with the collateral property. According to the laws of the Russian Federation, you can either sell the car or change the mortgagee, that is, the credit institution.
The last procedure is called refinancing and is carried out on the terms provided by the banks.
Is it possible to sell a car on credit?
You can sell a pledged car in completely legal ways, regardless of who has the original vehicle passport (from the car owner or from a credit institution). To do this, you will first need to obtain the bank's consent to carry out this operation.
Typically, banks accommodate their clients, unless otherwise expressly provided for in the concluded loan agreement.
Therefore, before taking any action, it is recommended to carefully study the document and, if necessary, obtain additional explanations from bank credit experts or qualified lawyers.
If the loan agreement provides for the possibility of selling a collateralized car, then the bank must provide a statement of intent to perform this action and obtain consent.
If the agreement does not provide for the possibility of alienation of property before full repayment of the debt, you can use the services of loan refinancing or full early repayment.
Where do they sell used cars on credit? Mainly in car dealerships that have contractual terms with banks and are official partners of certain credit institutions.
How to do it legally
So, there are four legal ways to sell a credit car:
- selling a car after receiving permission from the bank. The car owner can independently find a buyer and conclude a sales agreement with him;
After the transaction is completed, part of the funds will be used to repay the loan, and the remaining amount will be transferred to the former owner of the car.
- offer the bank other property as collateral instead of a car. Banks often take such actions. At the same time, encumbrances are removed from the car, and at the same time documents are drawn up for other property (land, apartment, garage, country house, and so on). Naturally, when performing this operation, all expenses associated with the preparation of documents will need to be paid by the person being credited;
- . If the loan agreement provides for the possibility of full early repayment, then a person can get a loan from another bank, but without car collateral, repay the car loan and then freely dispose of their property;
Often, after such an operation, a certain amount of money still remains at the disposal of the former borrower.
- sell a pledged car through a car dealership, which is a partner of the bank. In this situation, all issues with the creditor are resolved by the employees of the car dealership. The car owner only needs to obtain the bank’s consent and transfer the car to the car dealership.
The negative side of such a deal is that car dealerships do not offer its real market value for the car, but buy the equipment much cheaper.
All other schemes for selling a pledged car are illegal, and the car owner bears criminal liability for their implementation.
Through a car dealership
Most often, mortgaged cars are sold through car dealerships. To find out which company you should contact to sell a car that is pledged, when submitting an application for a transaction to the bank, ask the organization’s employees for a list of companies engaged in this type of activity.
You can also obtain similar information on the bank’s official website or by calling the help desk.
When selling a car through a car dealership, although the car owner loses some money, he practically does not participate in the transaction.
Car dealership specialists directly contact the mortgagee banks, determining all the conditions of the upcoming transaction. They also independently find a buyer for the car.
It should be noted that first of all, the proceeds from the sale of the car will be sent to the bank to repay the car loan.
Via bank
All other schemes for the sale of a car that is pledged are carried out with the help or with the consent of the creditor bank.
The possibility of refinancing debt and transferring other property to the bank as collateral is decided individually in each specific case. In this case, you should pay attention to the availability of permission for full early repayment of the car loan.
Most of these agreements provide for the opportunity to repay the debt before the appointed time, but either with an additional fee for the operation or with a limit on the balance of the debt (most often the limit is 50% or less).
What to do if PTS is in your hands
A bank collateral agreement may provide for two different situations:
- keeping the car's passport in the bank until the car loan is repaid in full;
- a nominal deposit, that is, both the car and the title remain with the car owner, only appropriate restrictions are imposed on the car.
If the contract provides for a second collateral option, then the process of selling the car is greatly simplified, since all actions to change the owner of the car are registered in this document.
However, you should not think that it will be possible to sell a pledged car without obtaining the bank’s consent.
Even in this case, special permission is required to carry out the operation. Otherwise, all actions of the car owner will be considered fraud.
Actions when PTS is in the bank
Seizure of title is the most common type of collateral for a car loan. In this case, it will not be possible to legally sell the car without the participation of the bank.
However, if critical situations arise, banks do not interfere with such actions, since the main goal of a credit institution is to make a profit and full repayment of issued loans.
It is more expedient for the bank to quickly sell the pledged car with the assistance of the car owner than to put it up for auction on its own after a lengthy procedure for seizing the pledged property, which can only be done through the judicial authorities.
How to sell yourself
If an individual decides to independently sell a car purchased on a car loan, then he must:
- contact the bank with a corresponding application, attaching all the required documents. For example, a certificate from work confirming a reduction in wages, a certificate from the labor exchange confirming the status of unemployed, and so on;
- wait for the bank's decision to approve the operation. Before issuing such a decision, the bank will offer several other options for repaying the debt: installments, refinancing, “credit holidays” and so on. And only if the car owner decides to sell the car will he issue the required paper;
- then the car owner independently finds a buyer, using any available means: the car market, advertisements in the newspaper or on Internet resources, and so on;
- the owner of the car, who is the seller in this situation, and the buyer of the car come together to the bank, where a purchase and sale agreement is concluded between them. At the same time, bank specialists independently make a note in the PTS. The proceeds from the sale are used to pay off the seller's debt;
- the new car owner, after repaying the car loan of the previous car owner, is issued a vehicle passport, but provided that the money for the car has been transferred in full. Otherwise, the car remains pledged to the bank, and the buyer pays off the debt on the car loan. That is, a new loan agreement and collateral agreement are concluded between the new car owner and the bank.
In case of receiving a car loan, the car buyer is also obliged to provide the credit institution with a package of necessary documents.
Responsibility for gray schemes
The procedure for selling a credit car is quite lengthy and requires obtaining special permissions from the lender – the mortgagee.
Some people decide to do things in other ways:
- send a duplicate vehicle passport to the traffic police and use it to sell the car;
- sell a car without the bank's permission;
- sell the car in parts and then report the vehicle stolen.
All these actions are contrary to the laws of the Russian Federation and are severely punished.
The main articles of the criminal code for such operations are:
- - fraud. Punishment can range from a fine of up to 120 thousand rubles to imprisonment for up to 2 years;
- - false denunciation. The punishment is similar to the previous article.
The punishment is determined by the court in each individual case individually and depends on the severity of the actions taken and other situations that led to the trial.
From existing judicial practice, we can conclude that in most cases, fraudsters “get off” with a fine, but there are also situations where the perpetrators receive a real punishment associated with imprisonment.
In addition to these articles, in most cases problems arise with insurance companies, which regard such actions as unjust enrichment () and illegal use of other people's funds (). This mainly applies to cases where the car owner reports the car stolen.
Thus, you can sell a credit car either independently or with the help of a bank, and in completely legal ways.
Good afternoon, dear reader.
Often in practice you may encounter the following situation. A man took out a car loan and purchased a car, but did not have time to fully repay the debt to the bank. At the same time, the car owner urgently needed money and wants to sell the car. For example, a good option turned up to buy real estate. However, the person does not know what to do in this case.
This article will look at several options, allowing you to sell a credit car. I recommend that you study them all and choose the most suitable one:
Car collateral for car loan
First of all, let's focus on the fact that all car loan agreements provide for the fact that the car is pledged to the bank. Moreover, the conditions of most banks also imply that the vehicle’s passport () is kept in the bank until the loan is fully repaid.
An unpaid car loan in any case creates additional difficulties when selling a vehicle. Therefore, if you are just planning to take out a loan and suspect that you will have to sell the car ahead of time, then I recommend turning your attention to consumer loans. As a rule, the interest rates on such loans are higher, but you can sell the car without any problems. This issue is discussed in detail in a separate article:
Unfortunately, it is not always possible to foresee such a development of events, so we will assume that there is an outstanding car loan and the car needs to be sold.
7 options to sell a car on credit
1. Early repayment of a car loan
The method is that the car owner must make another loan, through which the car loan must be repaid. After this, the title will be returned from the bank, and the car can be sold without any problems.
In this case, you can get money in any way:
- Borrow from relatives or friends.
- Take consumer loan.
The proceeds from the sale of the car will first need to be used to repay the loan, and the remaining money can be used at your own discretion.
Please note that early repayment of a car loan may take quite a long time (about a month). This does not always happen, but there are cases. Therefore, you need to take out an additional loan for at least 1 - 2 months.
This method makes sense to use if most of the loan has been paid off.
For example, the total loan amount is 500,000 rubles, and there are 40,000 rubles left to pay. At the same time, the driver has 25,000 of his own savings, and he needs to borrow 15,000 rubles from friends/acquaintances.
If we are talking about large sums (hundreds of thousands of rubles), then it is unlikely that it will be possible to borrow them even for a short period of time.
2. Sale by agreement with the bank
In any case, the car owner has the opportunity to contact the bank for advice on selling the car. In this case, the bank can offer various options:
- Issuing a permit to sell a car.
- Sale of a car by a bank.
Possible options depend on the bank, so it makes sense to contact the manager and get more detailed information.
3. Re-registration of collateral
The method is that the car owner must offer the bank other property as collateral, the value of which exceeds the loan balance.
For example, banks willingly take real estate (apartments, houses) as collateral.
After replacing the collateral, the owner continues to pay the bank according to the previously approved schedule. However, you need to keep in mind that if payments stop, the bank can “take away” the mortgaged property and sell it to pay off the debt. However, the sale price may not be the most profitable.
4. Re-issuing a loan to the buyer
The method is that the loan agreement is reissued from the seller of the car to the buyer. The operation can only be carried out through bank employees.
For example, a car is sold for 700,00 rubles. In this case, the seller owes the bank 200,000 rubles.
In this case, the loan is reissued to the buyer, and the buyer transfers the remaining 500,000 rubles to the seller.
5. Sale to a buyout organization
Currently, there are specialized organizations that also buy credit machines. In this case, the car dealership employee goes to the bank along with the seller and resolves issues regarding the unpaid loan.
The advantage of this method is that the organization buys cars all the time, so the procedure will not take much time, and the buyer (organization) will not refuse to purchase because the car is “problematic.”
On the other hand, there is a drawback. Resellers offer a much lower amount for the car than you can get from selling it yourself.
6. Selling to a person who will repay the loan
In this case, the buyer transfers money for the car, and the seller uses these funds to pay the balance of the debt to the bank. The PTS is transferred to the buyer only after completion of all procedures at the bank, that is, this may take about a month.
This method is based on trust, so it is suitable for selling a vehicle to good friends. A buyer “off the street” is unlikely to agree to this option, because... There is a high risk of being left without money and without a car.
7. Sale based on a duplicate title
The method is that the seller, without the knowledge of the bank, receives a duplicate vehicle passport from the traffic police and sells the car under the guise of an ordinary one (not a credit car). Unfortunately, such cases happen in practice, which is why I included this option in the article.
This method is not suitable for a law-abiding owner, because He refers to fraud and is punishable under Article 159 of the Criminal Code of the Russian Federation. The size of the penalty depends on the value of the car:
| Damage | Article 159 of the Criminal Code of the Russian Federation | Punishment |
| up to 250,000 | part 2 | a fine in the amount of up to 300,000 rubles or in the amount of wages or other income of the convicted person for a period of up to two years, or compulsory work for a period of up to four hundred eighty hours, or correctional labor for up to two years, or forced labor for up to five years with or without restriction of freedom for up to one year, or imprisonment for a term of up to 5 years with or without restriction of freedom for a term of up to one year. |
| from 250,000 up to 1,000,000 | Part 3 | a fine in the amount of 100,000 to 500,000 rubles or in the amount of wages or other income of the convicted person for a period of one to three years, or forced labor for up to 5 years with or without restriction of freedom for up to two years, or imprisonment for a term of up to six years with or without a fine in the amount of up to 80,000 rubles or in the amount of the wages or other income of the convicted person for a period of up to six months and with or without restriction of freedom for a term of up to one and a half years. |
| from 1,000,000 | part 4 | imprisonment for a period up to 10 years with or without a fine in the amount of up to 1,000,000 rubles or in the amount of the wages or other income of the convicted person for a period of up to three years and with or without restriction of freedom for a period of up to two years. |
The situation through the eyes of the buyer
Various options for selling a car through the eyes of the seller were discussed above. Let's figure out what risks each method carries for the buyer.
Early repayment and re-registration of collateral There are no risks for the buyer, because The seller has the PTS in his hands. Therefore, the car can be sold at market value.
Sale based on a duplicate title An attentive buyer who first checks the car for collateral will cause an extremely negative reaction, and the deal will most likely fall through.
Other options carry a certain risk and additional inconvenience for the buyer. Therefore, if you decide to use one of them, then the buyer will have to give a good discount and sell the car below market value. This will be a fee for the inconvenience.
Summarizing this article, it should be noted that the most profitable financially are options 1 and 3, because they allow you to sell the car at market value. Therefore, if you have such an opportunity, then use one of them.
Good luck on the roads!