Yes, you can sell a car under finance in Australia. Your loan does not stop you from selling the vehicle. However, you must deal with any money you still owe. You can sell privately, trade the car in, use a dealership, or sell to a professional car buyer.
How Selling a Financed Car Works
Your lender is not the owner of your financed car.
However, if you have a secured car loan, your lender may hold a security interest over the vehicle. This gives the lender certain rights until you repay the debt.
The lender may register this interest on the Personal Property Securities Register (PPSR).
A PPSR search lets a buyer check whether someone still has a financial interest in the car. The Australian Government warns buyers that unpaid secured finance can create repossession risk.
Before you sell a car under finance, contact your lender. Ask what they need from you before the car changes hands.
An unsecured personal loan works differently. The lender may not hold a security interest over the car. However, you still need to repay the loan.
Leases and novated leases also follow different rules. Speak with your provider before arranging a sale.
Check Your Financed Car Payout
Start by asking your lender for a payout figure.
Do not rely on the balance in your banking app. Your payout figure shows the actual amount you need to close the loan.
It can include interest and other applicable fees.
Carsales recommends asking your finance provider for the outstanding balance and any payout fees before you sell the vehicle.
Check how long the payout quote remains valid. If settlement happens later, ask your lender for an updated figure.
Once you know the payout, compare it with your car’s current market value.
Calculate Your Financed Car Equity
Your equity tells you whether the sale can clear your loan.
| Position | Car sale price | Finance payout | Result |
|---|---|---|---|
| Positive equity | $30,000 | $24,000 | You keep $6,000 |
| Break-even | $24,000 | $24,000 | The sale clears the loan |
| Negative equity | $21,000 | $24,000 | You need to pay $3,000 |
Positive equity means your car is worth more than your payout.
For example, imagine a buyer offers $30,000 and your payout is $24,000. The lender receives $24,000, and you keep the remaining $6,000.
Negative equity works the other way.
If your payout is $24,000 but the car is worth $21,000, you still owe $3,000 after the sale.
If you plan to sell a car under finance with negative equity, work out how you will cover that gap first.
Do not assume a higher asking price will solve the problem. Use realistic market offers when you calculate your equity.
Sell a Financed Car Privately
A private sale may give you a higher price. However, you also need to manage more of the finance settlement yourself.
You can sell a car under finance privately by paying out the loan before the sale.
You may also arrange the payout as part of the sale. In that case, the buyer may send part of the payment directly to your lender.
Finder recommends contacting your finance provider first. Your lender can explain what your loan contract allows and how you should complete settlement.
Be open with the buyer about the finance.
A buyer can run a PPSR search using the vehicle’s VIN. The search may show your lender’s security interest.
For that reason, do not try to hide outstanding finance. Explain how you plan to clear it.
A common approach works like this:
The buyer pays the lender the payout amount. The buyer then pays you any money left over.
Confirm the exact process with your lender before you accept payment.
Sell a Financed Car to Dealers
A dealership or professional car buyer can make the process easier.
When you sell a car under finance to a dealership, the buyer may deal directly with your lender.
The dealer first confirms your payout figure. It then compares the payout with its offer for your car.
If the offer is higher, the lender receives the payout and you receive the balance.
If the offer is lower, you need to cover the shortfall.
For example, Carma explains that it can pay the finance provider first and send any remaining equity to the seller.
The exact process can vary between buyers.
Before you agree to the sale, ask three questions:
Who will contact the lender? Who will pay the payout? When will you receive the remaining money?
For a full explanation, read our guide to selling a financed car to a dealership.
Trade In a Financed Car
You can also trade in a car that still has finance.
The dealer values your current car and compares that figure with your payout.
If you have positive equity, the dealer can use the remaining value toward your next car.
For example, your trade-in might be worth $30,000 while your payout is $24,000. That leaves $6,000 toward the new vehicle.
Negative equity needs more care.
Some dealers may offer to add the shortfall to your next finance agreement. This can make the new loan larger.
It may also leave you owing more than the replacement car is worth.
Always compare the full changeover cost. Do not focus only on the trade-in figure or monthly repayment.
Check PPSR Before Car Settlement
The PPSR plays an important role in secured car finance.
A PPSR vehicle search costs $2 through the Australian Government website.
The search can show whether a lender has registered a security interest against the car. It may also show stolen or written-off status.
Private buyers often run this check before they pay for a vehicle.
After you clear the finance, keep your payout confirmation.
Your lender should also remove its security interest when appropriate.
If the interest still appears after you repay the loan, contact the lender listed on the PPSR certificate.
Keep your payout letter, payment records and sale documents together.
Choose Your Financed Car Sale Method
No selling method works best for everyone.
A private sale may give you more money. However, you need to manage the buyer, payout and settlement process yourself.
A dealership or professional car buyer can make settlement simpler. However, the offer may differ from a private-sale price.
A trade-in can work well if you already plan to buy another vehicle.
The safest way to sell a car under finance starts with three numbers: your payout, your car’s value and your equity.
Once you know those numbers, follow your lender’s settlement instructions.
If you want to sell a car under finance without managing the whole process yourself, Skip The Dealer can value your car and help coordinate the finance payout with your lender.