Selling a vehicle that still has an outstanding loan can be challenging unless the remaining mortgage is fully cleared by the bank. However, it's not entirely impossible. There are situations where people need to sell their car before paying off the loan, and there are specific options available to manage this. This article will help you navigate the process of selling a car that is still under loan. Depending on your circumstances, you can choose the option that best fits your needs.
Methods for Selling a Financed Car in Dubai
If you need to sell your car before fully repaying your auto loan, here are several ways to accomplish this in Dubai.
Settle the loan
If you have the means to pay off your car loan in Dubai, selling your car becomes straightforward by settling the remaining balance. Once the loan is paid off, follow these steps:
- Ensure that your bank electronically notifies the RTA of your loan settlement. Keep in mind that this process may take a few working days.
- Request an official clearance letter from your bank. This step is essential, though many car owners might overlook it.
Find a finance buyer
- If you're able to pay off the remaining balance, follow the previous steps. However, if clearing the debt isn't an option, there are two alternative ways to sell your financed car in Dubai.
- Find a buyer interested in purchasing your car through a bank loan and willing to use the same bank that holds the car's mortgage.
- If you locate a finance buyer, inform the bank to facilitate the loan transfer to the new buyer. Note that only a few banks in the UAE, such as Emirates NBD, Noor Bank, and Dubai Islamic Bank, offer loan transfer services, so you'll need to check if your bank supports this option.
- After the loan transfer is completed, the buyer should apply for a loan and get it approved by the bank. The bank will require a car valuation certificate to ensure the vehicle's value aligns with the new loan amount.
- If the agreed selling price differs from the outstanding loan balance, request the bank to settle the difference using the buyer's loan, which may include an early settlement fee, typically 1% of the loan amount.
- Transfer the vehicle's ownership to the buyer at an RTA or Tasjeel center.
- Lastly, ensure the buyer submits the new registration card and a copy of the comprehensive insurance to the bank. These documents are necessary to confirm ownership and close the loan.
Look for a cash buyer
- Contact the bank to find out the remaining balance on the loan and any early settlement fees for paying off the loan before its full term.
- Arrange a Power of Attorney or a seller’s agreement, granting the buyer the right to transfer the car into their name after the loan is cleared.
- Accompany the buyer to the bank, where they can pay the outstanding loan amount in cash or with a certified manager’s cheque equivalent to the car’s value.
- After the bank confirms the loan clearance electronically, the buyer must visit the RTA to finalize the vehicle transfer process.
Another method for selling a car under finance in Dubai is through an auto-loan pay-out. Emirates NBD has partnered with dubizzle Cars to introduce the convenient ‘AUTOSWAP’ service in Dubai. This option allows sellers to sell their financed vehicles without needing to settle the existing loan first. Through AUTOSWAP, the buyer can obtain a new loan to finance the purchase. Additionally, Emirates NBD customers benefit from free listings and evaluation services provided by dubizzle Cars.
- Visit the Emirates NBD website.
- Go to the Personal Banking section, select Auto Loans, and click on AUTOSWAP.
- Provide your name, email, and contact information.
- Specify the age of the car.
- Submit your application.
The buyer must have the following documents:
- Valid insurance for the car
- Passport with residence visa
- Emirates ID
- UAE driving license
A car under bank financing can only be sold once the outstanding balance is settled using the specified methods. The seller must conduct a vehicle inspection to verify that the car is fully operational and meets all necessary standards. The vehicle testing fee in Dubai is AED 150. For additional information, refer to our guides on vehicle testing centers in Dubai and the RTA vehicle testing process. After successfully passing the vehicle test, the RTA will issue a clearance certificate.
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