How to Sell My Car to Myself

Tech and cars on 07/06/2016 - 13:40
Last edited 07/06/2016 - 13:40

Hi All,

Any advice would be appreciated. General community here is very switched on/money conscious and so I'll definitely be considering your advice with great weight.

At the start of the year I bought a car. It was roughly $40k and it was paid out in cash from my savings.

Now I am thinking of buying a house and regret that I did not get a loan for the vehicle. (Big dent in the account that could have helped towards the deposit).

I was offered 4% PA interest rate over 3 years - which I would be able to keep up with my current income (would be roughly $1200 per month).

Do you know if I am able to sell my car to myself / how do I go about doing this?

This way, I will have close to $35k from the car and then I will continue paying it off monthly.

Thanks in advance for your comments/thoughts.

Automotive

Comments

  • djsweet on 07/06/2016 - 13:44
    +1

    Have you considered a Novated Lease?
    SmartLeasing see point 11.

    • Tech and cars on 07/06/2016 - 13:45

      Thank you - I prefer to not get my employer involved.

  • altomic on 07/06/2016 - 13:47
    +1

    sell it to a trusted friend and then buy it back - though you have 3% (?) transfer fee and will need to get a roadworthy

    • Tech and cars on 07/06/2016 - 13:50

      Going from this suggestion - I should be able to just go to a bank and buy it from myself and avoid the transfer fees.

      I'll investigate this further ! Thank you :)

      • altomic on 07/06/2016 - 13:56
        +4

        Maybe the questions should be - "can i get a car loan (already organised at a great rate) and use it for a house deposit?"

        and "do I actually need to buy and sell my own car to myself?"

        because you'd be drawing against the car/personal loan to pay X person (if you were going to buy a car). if you've satisfied the banks lending criteria then does the bank actually care how you use the money?

  • Davo1111 on 07/06/2016 - 13:48

    If you sell it to yourself, wont you need to pay the transfer tax?

    • Tech and cars on 07/06/2016 - 13:52

      https://www.qld.gov.au/transport/registration/concession/reb…

      I'm in QLD - it looks like I can "gift" it to my family - and then perhaps buy it back?

      • Davo1111 on 07/06/2016 - 13:55
        +2

        perhaps its worth speaking to your bank?

        The thing is, i think any savings will be negated

        • sparkles on 07/06/2016 - 14:06
          +1

          It's freeing up capital from a depreciating "asset" to use for an appreciating asset. It might be worth taking the hit in order to get into the housing market provided the interest rates are similar.

          I guess this is one of those prime examples of where you should drive the cheapest car your ego will allow, because car money goes up in smoke, whereas the house deposit works for you.

        • Tech and cars on 07/06/2016 - 14:23

          @sparkles:

          "I guess this is one of those prime examples of where you should drive the cheapest car your ego will allow, because car money goes up in smoke, whereas the house deposit works for you." - 100% disagree with this. There are many cars you can buy, sell it at the end of the year for the same price/minor profit.

          In this particular case - the car was very well negotiated upon purchase. I"m very confident I'll be able to sell the car for the same price at the end of the year.

          I still want to keep the car. That is why I am asking - as Altomic said: "can i get a car loan (already organised at a great rate) and use it for a house deposit?"

        • sparkles on 07/06/2016 - 15:31

          @khonfahm: I guess people have different philosophies on this and it's each to their own. I don't turn over my car once a year so I'd rather drive a $15k car, and have a $25k deposit or asset because when it all shakes out eventually the car will ultimately be worth zero, and hypothetically the house deposit "value" may have increased to $50k or $75k in 10 years. I couldn't give two hoots about cars as long as they look presentable and go, so I'd much rather own an extra property which is probably the outcome for me by spending much less on cars over my lifetime.

          Anyway, back to the question/s. A traditional car loan will be secured against the vehicle, you won't be able to use the funds for a house deposit. It may work if you do it as a unsecured personal loan, which you could technically use the funds any way you choose. Both options will reduce your borrowing capacity on the property, which will only really matter if you taking the property to your maximum limits. However, banks will look at your savings or rental history, and a red flag might be raised and look suspicious if your house deposit is effectively financed via a recent personal loan. Nobody would need to even save for a deposit if this was possible, you'd just take out a personal loan for the deposit amount required.

        • humdingaling on 07/06/2016 - 17:46

          @sparkles:
          i would agree with sparkles

          no matter what your point of view on vehicles are or what type of vehicle you own or what you value your car to be

          to banks…..cars = money sink that depreciates

        • Davo1111 on 07/06/2016 - 20:51

          @sparkles: I'm not sure trying to put a loan against a depreciating asset is a great idea. If anything, a loan against a vehicle would make it worth even less.

      • sparkles on 07/06/2016 - 14:04

        In VIC, you can pretty much only "gift" it to your spouse without paying the stamp duty. Do you have a husband/wife?

  • fruit on 07/06/2016 - 14:55

    OzExploits

  • uzz30 on 07/06/2016 - 15:02
    +5

    Might be a good idea to talk to a mortgage broker or two before rushing into financing your car.

    If you do finance the car you'll have to declare it as a liability upon applying for the mortgage anyhow. It may even be possible to list the car as a security for the mortgage.

    If you really need the cash to finance the deposit you are effectively borrowing against the car. You should compare the costs of financing the car against the cost of a mortgage with a reduced deposit.

    Edit: May by worth consulting a financial adviser for professional advise.

    • Euphemistic on 07/06/2016 - 15:29

      Don't worry about a 'financial adviser' the just sell insurance in my experience. You need the mortgage broker, bank or accountant to work out what you can afford.

  • apu on 07/06/2016 - 16:22
    +2

    If you hold the property in your own name, and then seek to sell it to yourself (again in a personal capacity), then this will not work. A sale contemplates 2 parties to the transaction.

    For finance purposes (i.e. to free up cash), I would have assumed that you could use the car as security to obtain a line of credit or personal loan etc. Otherwise, as others have said, sell the car (before it depreciates further) and get whatever cash you can out of it. Then purchase a new car under finance.

  • robertbruce on 08/06/2016 - 10:19

    op sounds like he is spoiling himself - ditch the car and buy the property

  • grb1234 on 08/06/2016 - 11:07

    Sale and lease-back. No brainer.

  • Gershom on 08/06/2016 - 11:32

    Financing the car will not help a mortgage application in the slightest. Probably the reverse. Stop the madness.

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