Consumer Affairs – October 11, 2013

Selling a financed vehicle

One of our readers, Allan Jones recently sold a vehicle he had financed through the bank. They issued him with a letter of ownership stating that he register the vehicle in his own name.
However, Allan sold the vehicle while it was still registered in the bank’s name, and then the confusion started! The new owner is now having problems getting the vehicle registered into his name. The municipality insists the vehicle needs to be registered in Allan’s name before the new owner has it registered in his. This worries Allan as he feels it places unnecessary risk on him.
He contacted the bank about the matter and was told that the vehicle need not be registered in his name at all. They told him that his letter of ownership gave him the right to do whatever he liked with the  vehicle, and he could restate the sale – between the bank (the seller), and the person who purchased the car (the new buyer) with himself as the middleman, and the person given permission by the bank to sell the vehicle to the new buyer.
The municipality however informed him that they would then require a letter from the bank that specifically instructs that the vehicle’s registration be transferred directly from their name to the new buyers name. The bank unfortunately do not want to issue the letter due to the fact that they have no further vested interest in the vehicle. They have, however, agreed that Allan has their full permission to do whatever he likes with the car.
He wanted to know what would happen to ensure that the vehicle gets registered directly from the bank to the new buyer or to ensure that vehicle is completely de-registered from his name. The municipality has procedures in place in order to ensure vehicles are not fraudulently bought or sold, and for this reason, the municipality wants to see the vehicle moving from the bank’s name, into the owner’s name, and then into the third party’s name. They just want to see the whole story.
To cut through the confusion, we spoke to two local banks and to the municipality and the procedure is very straightforward:
The previous owner needs to settle, in full, the outstanding amount with the bank.
Once the car has been fully paid up, the original owner picks up the paper work from the bank. This includes the log book and a letter from the bank stating that the car has been paid up.
The original owner takes the paperwork to the municipality and registers the car in his name.
Once it is registered in his name, he fills in a transfer form that he hands to the new owner – together with the log book. The new owner then registers the car in his name. It’s a good idea if the buyer and seller go together to the municipality for this so that there is no confusion.