What It Means When a Car Is Under Loan
When you buy a car via a bank or financing company, you agree to pay for it over time. Until the full loan amount is paid (plus any fees), the bank holds a mortgage on the vehicle. Legally, this means you can’t transfer ownership (e.g., sell to someone else) until the bank formally releases that mortgage, often via a clearance or release letter.If you try to sell without clearing the loan, you’ll likely run into legal blocks — the RTA won’t allow ownership transfer, or potential buyers may refuse because of the risk. UAE law and practice require any outstanding loan on a vehicle to be resolved before transfer.Steps to Sell a Financed Car in UAE
Here’s a detailed flow of how people usually do it, especially those working with professional buyers like We The Car Buyers:- Get Your Loan Liability or Clearance Letter Contact your bank and request a document that states exactly how much you still owe, plus any early settlement charges. Many banks provide this “liability letter” or “loan payoff” amount. This is necessary to know whether your car’s market value covers the loan or if you need to pay extra.
- Valuation of the Car You need to know your car’s current resale value. This can be done through online valuation tools or in-person via trusted buyers. Valuation considers make, model, year, condition, mileage, and whether the car is running or damaged. In many cases, companies buy cars in any condition, even if under loan, non-running.
- Compare Value vs Loan Balance If your car’s resale value is more than what you owe (positive equity), you’ll get back money after loan clearance. If it’s less (negative equity), you’ll need to pay the difference. This is important when negotiating with a buyer or bank.
- Decide Who Will Clear the Loan
You have options:
- You pay off the outstanding loan yourself before selling.
- The buyer or car buying company agrees to settle the bank directly on your behalf and then pay you whatever remains.
- Transfer of loan financing: in rare cases, some banks allow the buyer to take over the loan (only if the bank agrees and the buyer meets all criteria).
- Obtain Clearance Certificate / Mortgage Release After loan payment, the bank provides a release letter or NOC and informs the RTA so the car no longer shows as “mortgaged” in official records. Ownership can only be transferred once this is cleared.
- Complete Required Documents and Legal Transfer
You’ll need:
- Emirates ID
- Registration Card (Mulkiya)
- Bank clearance letter or release certificate
- Any insurance documents
- Valid inspection certificate (if required)
- Power of attorney if someone else is handling the sale for you.
- Pay Outstanding Fines, Inspections, etc. Clear any traffic fines or past due fees. If required, have the car pass RTA inspection. These small costs and legal-clearances are often required before RTA official transfer.
- Transfer Ownership at RTA With all documents in hand and mortgage released, visit the RTA or authorised center. Sign over the Mulkiya to the buyer, submit clearance certificates, and complete transfer. The buyer ensures insurance transfer or new policy, and you receive payment. If working with a buying company, they may do this for you.
Real Challenges and Things to Watch Out For
- Some banks do not allow transfer of loan to another party easily; policies vary bank by bank. It may involve credit checks, salary criteria.
- Loan early-settlement fees can apply. Sometimes paying off the loan earlier has extra charges.
- The clearance process from the bank plus updating RTA records may take time (1‑3 days typically, sometimes more). Don’t assume instant clearance.
- Buyers might hesitate if paperwork isn’t clean, or if there are hidden issues like unpaid fines or missing inspection. So best to resolve all those proactively.
Why Working With A Professional Buyer Helps
Companies like We The Car Buyers simplify a lot of this. They provide free valuation, can guide you through bank loan clearance, handle RTA paperwork, accept cars in various conditions etc. With them, you avoid going back and forth with banks, filling complicated forms, or dealing with private buyers who may back out or delay.They also already know what document the bank or RTA requires, and they can help coordinate so that the sale completes quickly.FAQs
Can I sell my car if I still owe money on the loan?
Yes—you can, but the loan must be settled (either by you or by the buyer/company) and the bank must issue a release or clearance letter. Without that, you cannot legally transfer ownership.What happens if the car’s resale value is lower than loan balance?
You’ll be responsible to pay the difference to clear the loan. The buyer will usually only pay you what remains after loan clearance.Is there a standard bank fee for early settlement?
Yes. Many banks charge a small early settlement or processing fee (often around 1‑3% of outstanding loan, depending on the bank). Always ask the bank for details.Can someone else sell the car for me?
Yes — with a Power of Attorney (POA), legally documented, you can have someone else handle the sale and paperwork.How long does the process take?
Once you have the loan balance and documents ready, many professional buyers (such as We The Car Buyers) can complete the valuation to payment in as little as 20 minutes. But bank loan clearance and RTA notification might take 1‑3 working days in many cases.Conclusion
Selling a car under loan in the UAE isn’t impossible — it’s entirely doable if you follow the right steps: knowing your loan balance, working with your bank for clearance, preparing all required documents, and choosing a trustworthy buyer who handles the process professionally. While there are small challenges like early settlement fees, waiting time, and paperwork, the right buyer can make this process quick, transparent, and fair. If you’re in this situation, opting for a service like We The Car Buyers means you can avoid a lot of hassles and get the best value.Don’t let your car loan hold you back! At We The Car Buyers, we make selling your financed car in the UAE quick, simple, and stress-free. Get a free valuation, a fair price, and complete support with all the paperwork — all under one roof.
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