Buying a new car brings with it a whole new level of joy and achievement. We all know the excitement of getting behind the wheel of your brand-new car for the first time and driving it out of the showroom. That said, when you decide to upgrade your car, you might face the headache of selling or trading it in, especially if it still has an existing hire purchase loan.
Fortunately, we have some car loan early settlement tips if you’re wondering how to sell a car that’s still under loan in Malaysia.
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How to Sell Your Car When the Buyer Pays in Cash
The best scenario when it comes to selling your car under a loan is when the buyer pays for it in cash. Not only does this make the entire process so much easier, but it is also cheaper for you.
Here are the steps:
- You settle your outstanding car loan. You can do this with your own funds or if the buyer agrees, they pay you the agreed amount for you to use it to settle your loan and obtain the original vehicle ownership certificate (VOC) from the bank. If the selling price is lower than your outstanding loan amount, you’ll need to top it up with your own cash to settle your loan.
- Send your car for B5 Puspakom Ownership Transfer Inspection. You must pay RM30 for the inspection fee and RM3.50 for the online booking fee.
- Lastly, head to the nearest Road Transport Department (RTD/JPJ) office to transfer the ownership (RM100) of the vehicle. You need to bring along these documents for the ownership transfer:
- Your MyKad
- Original VOC or car grant
- Full details of the new owner including full name, MyKad number, and address
- After you have done your part at JPJ, the buyer has to do the same to finalize the car ownership transfer.
Your existing car loan is now settled and your car is successfully sold!
How to Sell Your Car to a Buyer Purchasing with a Bank Loan
Another scenario for selling your car that’s still under loan is when you find a buyer who wants to take a hire purchase loan to buy your car. However, the process can get trickier when the bank is involved.
For this kind of purchase, the bank will require a more in-depth report – the B7 Puspakom Hire Purchase Inspection Report (RM60), which generally takes more time to process.
The buyer then arranges for their own hire purchase loan before you can close the deal. This usually takes time as the buyer will have to wait for the loan to be approved before their bank can settle off your bank’s loan. Do note that this process can only go through if the sale value of your car is more than your loan balance.
Now, what happens if the sale value of your car is not enough to cover your outstanding hire purchase loan? For example, you sell your car for RM 50,000, but you have a balance of another RM 60,000 on your hire purchase loan.
If it comes to this, you, the seller, will have to top up the extra RM 10,000 towards your loan, and get your bank to send the loan settlement and release paperwork to the buyer’s bank. That way, the funds from the buyer’s bank will be enough to settle your car loan and the whole process can be concluded.
That said, many banks require the outstanding hire purchase loan to be settled in full by the borrower before the car can be sold off. That means you have to pay the full RM60,000 to clear your loan first and then get the buyer’s bank to pay you instead.
Unless you have RM60,000 lying around to pay the bank in full, used car dealerships are your next option because they have the capacity to settle your loan in full. However, most of the used car dealerships usually charge additional fees that can go up to RM5,000 to cover:
- Invoicing Fee
- Processing Fee
- Agreement Fee
- JPJ Fee
- Puspakom Fee
- A-Auto Fee
- Service Charge
What to Know before Selling a Car with an Existing Loan
Is There a Penalty for Early Car Loan Settlement?
Before selling your car, you need to note that banks usually only allow for early car loan settlement after five years (for a car loan term of nine years) and after four to five years (for a car loan term of seven years). This is because most hire purchase loans come with a lock-in period with fines or penalties for early loan settlement.
How to Find Out Your Car’s Value
To know your car’s sale value, you can get an instant estimate by visiting the CARSOME website or our app. You can also visit any CARSOME Experience or Inspection Center throughout Malaysia for a free car inspection and evaluation.
A professional and certified inspector will conduct a 175-point inspection on your car before presenting you with the value of your car. If you’re happy with the price we offered, you can proceed to sell it to CARSOME and we’ll handle all the paperwork for you.
Sell Your Car, Hassle-Free with CARSOME
Going to a used car dealer to sell or trade in your car with an outstanding loan is definitely easy but if you want to do it hassle free, you should check out CARSOME!
At CARSOME, your car will be inspected for free and you are guaranteed an end-to-end hassle-free service when selling your car. Not only that, you can trade in your car with us and get up to RM1,500 discount on your next ride.