How to Sell a Financed Car with a Settlement Letter in South Africa

What a settlement letter includes and why it matters

A settlement letter from your bank or finance house usually lists the outstanding capital, interest up to a specified date, administration fees and any early-settlement penalties. Lenders often set a validity period for that figure (for example 7-30 days). The settlement letter proves how much must be paid to remove the bond and allow lawful sale or transfer of ownership in South Africa.

Who must authorize the sale?

If the vehicle is bonded, the finance provider is the legal lienholder until the bond is settled. You can sell the car if you obtain the settlement figure and the finance provider agrees to the settlement process. We work with sellers and lenders to obtain and verify settlement letters and to ensure bond release before or at the time of transfer.

Why selling to a specialist helps

Selling a financed car privately can be slow, risky and logistically complex - buyers may request proof of bond clearance, and arranging payment to the lender adds time. Sell Your Damaged Car simplifies this: we request and verify the settlement figure with the lender, arrange payment to the finance account, handle deregistration administration and collect the vehicle by free towing anywhere in South Africa. For an overview of our service and how it works, see our About / How it works page.

Common seller concerns

• Timing: settlement letters often expire - prompt action keeps figures valid.
• Verification: lenders require proof of identity and account details before releasing funds or a bond clearance letter.
• Remaining balance: if the sale price exceeds the settlement amount, the remainder can be paid to you after settlement; if the settlement exceeds the sale price, that shortfall must be managed before transfer.

If you want to understand how selling a non-running or damaged financed vehicle works specifically, check our Sell Non-Running Car and Sell Damaged Cars pages for condition-specific guidance.

Step-by-step: selling a financed car with a settlement letter

Selling a bonded vehicle through Sell Your Damaged Car typically follows these steps. Timescales depend on the lender’s response time and whether a physical bond release is required, but many settlements complete within a few business days once the settlement letter is issued and verified.

1. Request a settlement letter from your lender

Contact your finance provider and request a settlement figure for a specific date. Ask about any early settlement fees and how long the quote remains valid. We can liaise with your lender to confirm the figure if you give consent.

2. Get an offer and agree the settlement method

Submit your vehicle details and the settlement letter when you request an offer. We provide a transparent cash offer that accounts for the settlement amount and vehicle condition. If you accept the offer, we coordinate payment to the finance account and confirm any surplus funds payable to you. To begin, you can upload vehicle details on our homepage.

3. Documentation & verification

• Valid ID and proof of ownership/permits if requested.
• The settlement letter from the lender (dated and signed or electronic equivalent).
• Vehicle registration papers and bank details for any residual payment.

4. Collection, transfer and payment

We arrange free towing nationwide - including Johannesburg, Cape Town and Durban - collect the vehicle, pay the finance provider directly as agreed, complete the transfer paperwork and, where applicable, release the remaining balance to you. For full details on how we handle paperwork and collections, see our About / How it works page.

Practical tips for a smooth settlement

• Request the settlement letter early and confirm the expiry date; act before it lapses.
• Get all ID and registration docs ready to speed verification and transfer.
• If the settlement exceeds the sale price, discuss options with us - some lenders accept part-payments on settlement dates if approved.

Need more help?

If you’re ready to sell a financed vehicle, start by uploading your details and the settlement letter so we can provide a transparent offer. Use the homepage to Get your free quote and, when you accept, we’ll arrange collection and handle settlement and deregistration so you receive fast payment.

Sources

• National Credit Regulator (overview of consumer credit and obligations)
• Department of Transport - vehicle registration and transfers in South Africa
• Example lender guidance on vehicle finance and settlement (FNB)