Selling a Financed Car: Legal Solutions and Procedures (2026 Guide)

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A common misunderstanding among car owners is that they have the absolute right to sell their vehicle at any time. However, if the car is still under financing, the legal owner is the Bank or Finance Company, while you are merely the "Lessee" (Hirer).

Selling a financed vehicle without the bank's formal permission is not just a breach of contract; it is a criminal offense in Thailand classified as Embezzlement.

This guide outlines the correct, legal methods to sell a car with an outstanding loan, addressing common problems like "Negative Equity" (where the debt is higher than the car's value).

The Golden Rule: Who Owns the Car?

Until the final installment is paid, the vehicle’s "Blue Book" (Registration Book) remains with the bank. Therefore, you cannot transfer ownership at the Department of Land Transport (DLT) without the bank's involvement. Any attempt to sell the car "off the books" (e.g., passing the car to a friend to continue payments) leaves you fully liable for the debt and any crimes committed with the vehicle.

Method 1: Closing the Account (Cash Sale)

This is the most straightforward method, suitable when a buyer offers to pay for the car in full (cash) or arranges their own financing.

The Procedure:

1. Check the Payoff Amount: Contact your lender to request the "Account Closing Figure." This amount is usually lower than the sum of remaining monthly installments because banks often offer a discount on the remaining interest (typically 50% of the unearned interest).
2. Compare with Market Price:
   • Case A (Positive Equity): If the Selling Price is higher than the Debt (e.g., Sell for 500k, Debt is 300k), you keep the 200k profit.
   • Case B (Negative Equity): If the Selling Price is lower than the Debt (e.g., Sell for 400k, Debt is 500k), you must pay the 100k difference to the bank out of your own pocket to release the title.
3. Execute the Transaction: The buyer pays the bank directly. Once the debt is cleared, the bank sends the Blue Book and transfer documents (usually within 7-14 days) to complete the ownership transfer at the DLT.

Method 2: Transfer of Hire-Purchase Rights (Changing the Contract)

This is the only legal way to let someone else take over your installments. It is ideal when the car represents a financial burden, but the market value is too low to sell for cash.

The Procedure:

1. Check Eligibility: Most banks require that the car has been financed for at least 1 year (or 12 installments paid) and is not in default.
2. Vet the New Buyer: The new buyer must undergo a credit check and submit income documents (Salary slip, bank statement) just like a new loan applicant.
3. Bank Application: Both parties must visit the finance company to sign a "Transfer of Rights" agreement.
4. Costs Involved: Be prepared for:

• • • Transfer Fee: Approx. 1,500 - 4,000 THB.
    • Advance Installments: The bank usually requires the new buyer to pay 1-2 months of installments upfront.
    • New Insurance: A new insurance policy covering the new owner is often mandatory.

The Danger of "Selling Down Payment" (Kai Dao) Without Contract Change

Many sellers try to bypass the bank by taking a small cash payment and handing the car to a buyer who promises to "pay the installments in your name."

Why you must avoid this:

1. It is Illegal: You are selling an asset that does not belong to you (Embezzlement).
2. Financial Ruin: If the buyer stops paying, the bank will sue you, not them. You will be blacklisted and forced to pay the full debt.
3. Criminal Liability: If the buyer uses the car for drug trafficking or illegal activities, the police will trace the registration back to you.

Conclusion

Selling a financed car requires transparency and adherence to bank procedures. Whether you choose to close the account or transfer the contract, the bank must be the central party in the transaction.

Need help calculating your equity? If you are unsure whether your car's value covers your outstanding debt, get a free valuation from Motorist Thailand. We can assess your car's market price and connect you with partners who can handle the account closing process professionally and legally.

Reference Sources

1. Legal Framework: Civil and Commercial Code (Hire-Purchase) / Criminal Code Section 352.
2. Bank Procedures: Krungsri Auto (Transfer of Rights), TISCO Bank.

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