A car loan is a common way for us to buy the vehicle we want when we don’t have the purchase price funds available upfront.
If the car loan is approved, the finance company will pay the car seller the loan proceeds and you get to drive away in your new car. Unfortunately, whilst you may think of it as “your car” until you’ve fully paid for it, it actually belongs to the finance company. If you wish to sell the vehicle whilst its financed you are required to get their permission to sell it and the sale proceeds should be applied to your loan.
If you have already sold the vehicle without informing the finance company (or gaining their consent), then they have the right to track down the vehicle and seize it from the new owner. This causes additional debt as the repossession leaves the new owner out of pocket and you will owe them that money as well as the outstanding loan to the finance company. It should be noted that this would be classified as fraudulent activity; if they chose to report the matter to the Police, it is possible it could leave you open to criminal charges.
Technically, in this scenario, the loan to the finance company is now an unsecured debt and needs to be dealt with accordingly. We would recommend calling to speak with one of our debt analysts as soon as possible.
At Life After Debt ® we know debts and we know solutions.
We can assess and discuss the best debt solution for you, based on your personal situation and budget. We can advise you on debt relief options which will provide you will legal protection from Creditors taking action against you and combine eligible unsecured debts into one manageable repayment package. Click here to request a callback.