Can you sell a car under finance?

What you need to know about selling financed cars

Selling a car under finance might seem overwhelming, but it’s a necessary step for many Australians. Whether you’re upgrading to a new car, managing financial commitments, or simply moving on from your current car, understanding how to sell a financed car is key to avoiding complications.

Selling a car under finance is a significant decision, and getting it right can save you time, money, and unnecessary stress. At 1800 Car Buyers, we’ve helped countless Australians navigate the complexities of selling financed vehicles. With our expertise in secure payments and transparent processes, we’re here to ensure you have all the information you need to make informed choices.

In this blog, we’ll cover:

• What happens when you sell a car with outstanding finance
• How to sell a financed car without paying it off upfront
• State-by-state advice to simplify the process
• Practical steps to ensure a smooth, legal transaction

By the end, you’ll have the knowledge to confidently sell your financed car, whether it’s through a private sale or a professional car-buying service like ours.

Yes or no — can you sell your car if it’s still under finance?

Yes, you can sell a car that’s still under finance. The key is understanding how to handle the loan during the sale.

When a car is under finance, the lender retains legal ownership until the loan is fully paid off. This doesn’t necessarily mean your car can’t be sold, but you must ensure the loan is cleared before transferring ownership to the buyer. The good news is that there are straightforward ways to manage this, whether you pay off the loan yourself beforehand or work with the buyer to settle it during the sale.

By following the right steps, you can ensure a smooth transaction, avoid potential risks, and make the process hassle-free for both parties. In the sections that follow, we’ll explore the most common questions and provide practical guidance for selling your car with confidence.

The 5-step process of selling a car under finance

Selling a financed car involves a few essential steps, but it’s a straightforward process when you understand what’s required. Whether you’re planning a private sale or working with a professional car-buying service, here’s how to sell your car under finance with confidence.

Step 1: Request a loan payout figure

Start by contacting your lender to request a payout figure. This is the exact amount you need to pay to clear the loan. Understanding this number helps you set realistic expectations for your sale and ensures you know how much of the sale proceeds will go toward paying off the finance.

Step 2: Check your car’s market value

Determine your car’s current market value using tools like online valuation services or professional appraisals. Compare this value to your loan payout figure to see if the sale will cover the loan or if additional funds might be needed. Keep in mind, a car’s market value can vary based on its condition, age, and mileage — it’s important to understand that your car isn’t worth overstating to potential buyers.

Step 3: Be transparent with potential buyers

If you’re selling privately, it’s crucial to inform potential buyers that the car is under finance. Transparency builds trust and reassures buyers that you’re handling the transaction responsibly. Many buyers are comfortable purchasing a financed car as long as the process is clear.

Step 4: Coordinate the payout with the buyer

During the sale, arrange for the buyer’s payment to go directly to your lender to settle the loan. Once the lender confirms the loan is cleared, ownership can be transferred to the buyer. This step ensures the transaction is smooth and eliminates any legal complications.

Step 5: Transfer ownership

Once the loan is cleared, you can transfer the car’s ownership to the buyer. Follow the specific registration transfer requirements in your state or territory to finalise the sale.

State-by-state guide to selling a car under finance in Australia

Selling a financed car in Australia requires careful attention to the rules and processes in your state or territory. Each jurisdiction has specific requirements you have to meet to sell your car, from clearing the loan to transferring ownership. Below, we’ve outlined key steps for each state along with resources to ensure you have all the information you need.

How to sell a car under finance in Victoria

To sell your car in Victoria, you must disclose any outstanding finance on the car to the buyer. A Section 32 Certificate may be required to legally declare the car’s financial status. The loan must be cleared before ownership can be transferred to the buyer.

To complete the sale:

1. Request a payout figure from your lender and plan to clear the loan as part of the transaction.
2. Notify the buyer of the car’s encumbrance and ensure transparency throughout the process.
3. Use VicRoads’ vehicle transfer guide to manage ownership transfer once the loan is paid off.

Selling a financed car in New South Wales

To sell your car in NSW, you need to ensure buyers are informed about any finance issues with the vehicle. Checking the car’s status on the Personal Property Securities Register (PPSR) is an important step, as it verifies whether the car is encumbered. The Roads and Maritime Services (RMS) oversees the transfer of registration.

Steps to follow:

1. Clear the loan with the payout figure provided by your lender.
2. Inform the buyer about the car’s finance status using a PPSR report.
3. Transfer ownership through the Transport for NSW portal, ensuring all necessary documentation is submitted.

Selling a car under finance in Queensland

Selling a car in Queensland requires a safety certificate, even if it is under finance. This certificate assures buyers that the vehicle meets minimum safety standards. Additionally, the loan must be cleared before registration can be transferred.

To complete the sale:

1. Obtain a safety certificate and provide it to the buyer as part of the sale.
2. Coordinate with your lender to pay off the loan during the sale.
3. Finalise the transfer of registration with the Department of Transport and Main Roads (TMR) via their vehicle registration services.

How to sell a financed car in South Australia

To sell a car in South Australia, you are required to clear any outstanding finance before the ownership transfer is completed. Transparency about the car’s financial status is critical for a smooth transaction.

Here’s what to do:

1. Use the PPSR to check the car’s encumbrance and share this information with the buyer.
2. Pay off the loan to ensure the lender releases the car’s ownership.
3. Complete the registration transfer with the buyer through the SA government website.

Selling a car with outstanding finance in Western Australia

When selling a car in WA, all outstanding finance must be cleared before selling a car. Buyers are advised to check the PPSR to verify the car’s status, and the transfer of ownership is managed through the Department of Transport.

Steps to take:

1. Settle the loan with your lender and confirm the encumbrance has been removed.
2. Provide the buyer with proof of the loan’s settlement if requested.
3. Use the WA Department of Transport online portal to finalise the ownership transfer.

How to sell a financed car in Tasmania

To sell your car in Tasmania, you need to pay off any existing car loan before transferring ownership. It’s also critical that the buyer is informed they’re about to buy a car that’s under finance.

How to proceed:

1. Request a payout figure and settle the loan with your lender during the sale.
2. Ensure all registration documents are in order for the buyer.
3. Use the Tasmanian Department of State Growth services to manage the transfer of ownership.

Selling a car under finance in the Australian Capital Territory

To sell your car in the ACT, clearing the loan is a mandatory step before ownership can be transferred. Buyers are encouraged to use the PPSR to verify that the car is free of encumbrances.

To sell your car:

1. Pay off the loan and request confirmation from your lender.
2. Provide buyers with any required documentation to ensure transparency.
3. Finalise the transfer through Access Canberra, the ACT’s vehicle management authority.

Selling a car under finance in the Northern Territory

When selling your car in the NT, you must ensure all finance on the vehicle is settled before the sale is completed. Buyers may use the PPSR to check the car’s financial status.

Key steps:

1. Clear the loan and confirm the car is no longer encumbered.
2. Provide the buyer with any necessary proof of settlement.
3. Transfer ownership through the NT’s Motor Vehicle Registry.

Selling a financed car requires careful preparation, but these steps ensure a smooth and legal transaction. Use the resources provided above to navigate the specific requirements in your state or territory, and reach out to 1800 Car Buyers for expert assistance in selling your financed vehicle quickly and confidently.

What happens if you sell a car with outstanding finance?

There are significant legal and financial implications if the loan you owe isn’t cleared as part of the sale. Here’s what you need to know about the risks of selling a financed car and the potential outcomes if the process isn’t managed properly.

Who owns a financed car?

If your car is under finance, then you don’t own the car — technically, the lender owns the vehicle till you’ve paid it off. This means you cannot transfer full ownership to the buyer until the outstanding loan has been cleared. If you attempt to sell the car while it’s still under finance without disclosing its encumbrance, the sale could be invalid, and legal action may follow.

What are the risks of selling a car without clearing the loan?

If you sell a car with outstanding finance but fail to pay off the loan, several risks arise:

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1. Repossession by the lender: Since the lender retains ownership, they can repossess the car from the buyer, creating legal and financial trouble for both parties.
2. Damage to your credit rating: Failing to clear the loan as agreed can lead to missed payments or default, which may negatively impact your credit history.
3. Legal disputes: The buyer may take legal action against you for failing to provide a clear title to the car.

Why is clearing the loan essential?

To protect yourself and the buyer, the loan must be settled as part of the sale process. This involves using either your own funds or the buyer’s payment to pay off the remaining balance with the lender. Once the loan is cleared, the lender will release their financial interest in the vehicle, allowing the ownership to be legally transferred to the buyer.

How can you ensure a smooth process?

To avoid complications, follow these steps:

1. Request a payout figure: Contact your lender to get an up-to-date figure for the remaining loan balance.
2. Inform the buyer: Be transparent about the car’s finance status so they understand the process.
3. Coordinate the payout: Arrange for the buyer’s payment to go directly to the lender, ensuring the loan is cleared before finalising the transfer of ownership.
4. Provide documentation: Once the loan is settled, ensure all paperwork, including proof of loan clearance, is provided to the buyer.

How to sell a financed car without paying it off

If you’re selling the car while it’s still under finance, you don’t always need to pay off the loan out of pocket before completing the sale. Many Australians successfully sell financed cars by incorporating the loan payout into the transaction itself. Here’s how to manage this process step-by-step.

Use the buyer’s payment to pay off the loan

Yes, this is a common way to sell a financed car without paying off the loan upfront. In this arrangement, the buyer’s payment is used to settle the loan directly with your lender. Once the loan is cleared, the lender releases ownership of the car, allowing the transfer of registration to proceed. This ensures the car for sale meets the buyer’s expectations for a smooth and legal transaction.

Explain the process to the buyer

Transparency is key when selling a car with outstanding finance. Inform the buyer that it’s under finance and explain that their payment will be used to clear the loan. Providing a clear outline of the steps reassures the buyer and builds trust in the transaction.

Take these steps to manage the sale

1. Request a payout figure: Contact your lender to get the exact amount needed to settle the loan.
2. Share the payout details with the buyer: Let the buyer know how their payment will be directed to the lender.
3. Coordinate the payment: On the day of the sale, the buyer can pay the lender directly or transfer the funds through you, ensuring the loan is cleared before ownership is transferred.
4. Provide proof of loan clearance: Once the lender confirms the loan is paid off, share the proof with the buyer for their records.

Consider other options to complete the sale

If the buyer is hesitant about paying off the loan directly, you may be able to:

• Work with a car-buying service: Companies like 1800 Car Buyers handle loan payouts as part of the sale, making the process seamless for both parties.
• Negotiate with your lender: Some lenders may allow you to restructure the loan or use part of the sale proceeds to clear it.

Selling a financed car without paying it off upfront is a practical solution that ensures you can complete the sale without financial strain. By coordinating with a finance company, car buyer or other lender and maintaining clear communication with the buyer, you can finalise the sale confidently and securely.

Selling a financed car doesn’t have to be complicated

Selling a car under finance is a straightforward process when you know your options and follow the right steps. Whether you’re using the buyer’s payment to clear your personal loan, navigating the legal requirements in your state, or ensuring a smooth ownership transfer, preparation is key to a successful sale.

At 1800 Car Buyers, we make selling financed cars easy. Our team specialises in handling these transactions with transparency and efficiency, so you can avoid the stress and focus on moving forward. From fast quotes to secure Osko payments, we’re here to guide you through every step.

Ready to sell your financed car? Contact us today to get a competitive quote and let us take care of the rest.