Understanding Bank Settlement Amounts When Selling a Car in South Africa

Overview: What Is a Bank Settlement Amount?

When selling a vehicle in South Africa that still has outstanding finance, the bank settlement amount is the exact sum required to settle your loan in full and release the car's title. Understanding this figure is crucial whether you're upgrading, trading in, or selling your car after an accident or mechanical failure. Settling the outstanding amount with your bank is a standard step for any owner with a financed vehicle, regardless of the car's condition.

How Is the Bank Settlement Amount Calculated?

The settlement amount differs from your remaining monthly balance. It typically includes:

• Outstanding principal (capital) on your vehicle finance
• Accrued interest up to the day of settlement
• Any early settlement or administrative fees set by the bank

Always request an official settlement letter from your bank. This letter states the exact amount valid until a specific expiry date, often 5-7 days.

When Do You Need to Settle a Vehicle Loan?

• Selling your car privately or to a dealership
• Trading it in towards another vehicle
• Selling a damaged or non-running car for cash (specialist buyers like Sell Your Damaged Car assist with this process)

If your car is written off, non-runner, or accident-damaged, you still need to settle your finance to transfer ownership and deregister the vehicle.

How Does the Settlement Process Work When Selling?

The standard process for selling a financed car in South Africa involves several clear steps to ensure you and the buyer (private individual, dealer, or specialist service) are protected:

1. Request your current settlement letter from your bank.
2. Agree on the sale price and provide the settlement amount to the buyer.
3. The buyer pays your bank directly (up to the settlement amount). Any remaining agreed value can be paid to you.
4. Once paid, the bank issues a confirmation and releases the NaTIS document, enabling transfer of ownership and deregistration.

Common Questions on Settlement Amounts

• What if my car's value is less than the bank settlement?
  You must pay any shortfall to the bank (this is called being "underwater").
• Can I sell a damaged car that's still under finance?
  Yes. The settlement process applies regardless of vehicle condition, but buyer experience with paperwork is valuable.
• How long does settlement take?
  Settlement is usually finalised within 1-3 business days after payment is received by your bank, enabling ownership transfer.

Tips for a Smooth Sale Involving a Settlement

• Check the expiry date on your settlement letter and act swiftly within this window.
• Compare the offer you're receiving with the total settlement - know if a shortfall applies.
• Use a reputable buyer with experience settling finance, especially for damaged or salvaged vehicles.
• Keep copies of all receipts, letters, and transfer confirmations from your bank.

What Happens After Settlement?

Once the settlement is confirmed, the bank issues a NaTIS deregistration certificate. Only then can ownership legally pass to the new buyer, and you are released from your financial obligation. Specialist buyers can help with this process to avoid paperwork delays. Always check that the settlement payment reflects on your bank statement before releasing the vehicle.

Sources

• WesBank - How to Calculate a Settlement Amount
• TransUnion - Safely Selling a Car Under Finance
• Arrive Alive - Deregistration of a Motor Vehicle
• Sell Your Damaged Car - About the Process