How to Sell a Financed Car Privately and Settle the Bank in South Africa

Overview: Selling a Car with Outstanding Finance in South Africa

For many South Africans, selling a car privately before the finance is fully paid off is a practical option-especially if you need to upgrade, downsize, or want to get out of debt. The process involves more steps than for an unencumbered vehicle, but with solid planning and correct paperwork, you can sell a financed car, settle the outstanding bank balance, and transfer ownership without legal hassle. Here's what every vehicle owner with a financed car should know.

When Should You Consider Selling Your Financed Car?

• Financial pressure: If the monthly repayments are too high
• Vehicle no longer fits your needs (e.g., family size, lifestyle change)
• Market conditions: Your car's value is above settlement, letting you recover some cash
• End of warranty period with increased maintenance costs
• Job relocation or need to reduce debt

Understanding Your Car's Settlement & Value

Start by requesting a settlement letter from your bank or finance company. The letter will show the exact outstanding amount (including any admin fees or interest) required to clear your loan. Compare this settlement against your vehicle's realistic resale value to gauge if a private sale will leave you with a surplus, break-even, or require you to pay in the shortfall.

These scenarios are very common in South Africa, especially when vehicle values drop or if you're selling shortly after purchase.

How the Finance Settlement Process Works

To legally sell a car still under finance, the title (registration) must be released by the bank after settlement. Here's a step-by-step breakdown:

1. Request a written settlement quote from your bank (valid only for 7-14 days).
2. Advertise the car, indicating in your listing that the vehicle is still financed.
3. Agree a sale with your private buyer, making them aware of the process.
4. The buyer pays the settlement amount (directly to the bank), or you settle from your own funds before ownership transfer.
5. After the loan is paid, the bank issues a "proof of settlement" and releases the original NaTIS registration document.
6. The buyer receives the NaTIS document, and the car can be registered in their name.

Legal, Paperwork and Deregistration

All financed vehicle sales require proper documentation for both parties' protection and legal compliance. Typically, you will need:

• Original NaTIS registration (released by the bank after settlement)
• Proof of settlement from the bank
• Signed Notification of Change of Ownership (NCO) form
• Proof of address and ID documents (for both seller and buyer)
• Roadworthy certificate (if required for registration transfer)

If you're selling a damaged, non-running, or written-off car still under finance, inform your bank as some may require additional steps or insurance claim settlement. Specialist buyers (like Sell Your Damaged Car) can advise on the quickest process if you want to avoid lengthy admin and delays.

Tips to Maximise Your Sale and Protect Yourself

• Be transparent about finance and the settlement amount with buyers from the start
• Provide high-quality, honest photos and disclose any issues or damage
• Always finalise settlement with the bank before releasing your car or documents
• Use a trusted, secure venue for exchanging funds and signing paperwork
• Keep records of all correspondence, payment proof, and signed forms

After Collection: What to Expect

Once the bank settles the account, issues the NaTIS, and the ownership is transferred, your responsibility for the car (including fines and e-tolls) ends. Always remember to complete a Notification of Change of Ownership at your local licensing office, and provide the buyer with all supporting documentation for registration. Keep your copies for records.

Sources

• WesBank: What Happens When You Sell Your Car?
• Arrive Alive: Transfers of Ownership of Vehicles
• AutoTrader SA: How to Sell a Car Still Under Finance
• Sell Your Damaged Car: About Us
• Standard Bank: How Do I Sell My Car?