Selling a car still under a bank loan in the UAE can be a complex process, but it’s certainly possible if you follow the right steps.
Experts emphasize the importance of understanding that the bank holds the car’s title until the loan is fully repaid, meaning you need to clear the loan before transferring ownership.
Can You Sell a Car Still Under Loan?
Madiha Asif, a business analyst and personal lines manager at Nexus Insurance Brokers, confirms that selling a financed car in the UAE is feasible but involves specific conditions. “The existing loan must be settled before transferring ownership,” she explains. The bank retains a legal claim on the vehicle until the loan is repaid, making their approval essential for any ownership transfer.
Steps to Sell a Financed Car
The process for selling a car under a loan can vary depending on the bank or financial institution. However, the general steps include:
- Inform the Bank: Notify your bank of your intention to sell the car. The bank will provide you with the exact loan balance that needs to be cleared.
- Settle the Loan: Pay off the outstanding loan yourself or arrange for the buyer to do so as part of the purchase price.
- Obtain a Loan Clearance Letter: Once the loan is fully paid, the bank will issue a loan clearance letter, which is necessary for the ownership transfer.
- Transfer Ownership: With the loan clearance letter, proceed to the Roads and Transport Authority (RTA) or the relevant authority in your emirate to complete the ownership transfer to the buyer.
Can the Loan Be Transferred to the New Owner?
Typically, car loans are not transferable. “The loan is tied to the original borrower, not the vehicle,” Asif notes. The new owner would need to secure their own financing if needed. The original loan must be cleared before the ownership transfer can take place.
What If You Can’t Clear the Loan Yourself?
If you lack the funds to pay off the loan, consider these options:
Find a Cash Buyer
Look for a buyer who can pay the full amount in cash and settle the outstanding loan on your behalf. Qaiser Abbas, co-founder of SellCarUAE, suggests finding a buyer willing to purchase the car and clear the loan directly.
Transfer the Loan (Bank Dependent)
Some banks may offer the option to transfer the loan to the new buyer, but this varies. Abbas advises that sellers may need a valuation certificate to ensure the car’s value matches the loan amount. If the selling price differs from the outstanding loan, you can ask the bank to settle it using the buyer’s loan, once approved. The bank will then issue a mortgage release document, necessary for starting the ownership transfer with RTA.
Final Thoughts
Always consult your bank for accurate information, as processes can vary. Selling a car under loan requires careful attention to detail, but by following the right steps, you can successfully transfer ownership and move forward.
