Ask Gulf News: Can I sell my car while a bank loan is still outstanding?

Question: I purchased a car through a bank loan, and I still have two years remaining on the loan. I would like to sell the car to another person. Do I need to inform the bank before selling the vehicle? Also, what procedures are required to transfer ownership through the RTA while the loan is still outstanding? Please advise 

Answer: To inform the bank before selling the vehicle or not, depends on whether the outstanding loan will be settled in full before the sale to the buyer.

In case the buyer is paying you cash, then you do not have to inform the bank before selling it. You can settle the loan with the bank and take the Mortgage Release Document (or a clearance letter/NOC). Once the loan has been fully repaid, the bank will usually update the RTA system electronically to remove the mortgage registered against the vehicle. After the mortgage has been released, you may proceed with the ownership transfer at the RTA in favor of the buyer.

If the buyer wishes to bear the remaining loan balance instead of paying the full purchase price, you must inform the bank and attend the bank together with the buyer. Any transfer of the loan is subject to the bank's approval. If the bank agrees, it will require the buyer to enter into a new loan and mortgage agreement, and the bank has the right to impose new terms and conditions at its discretion. Upon completion of the new financing arrangement, the bank will issue the necessary release documentation to facilitate the transfer of ownership through the RTA.