Can You Sell a Car That Still Has Finance on It?

Selling a car is usually straightforward — unless there’s still finance owing on it. Many Australians aren’t sure what to do in that situation. Can you legally sell a financed car? Will the buyer even want it? And what happens to the remaining loan? These are all valid questions, and the short answer is yes, you can sell a car that still has finance on it — but there are some important steps to follow.

What Does “Finance Owing” Actually Mean?

When you buy a car on finance, the lender — usually a bank or car finance company — technically owns the vehicle until the loan is fully repaid. That means you can drive and use the car, but you don’t have complete ownership just yet.

If you try to sell it before paying off the loan, the car still has a financial interest recorded against it, often listed on the Personal Property Securities Register (PPSR). This register is what buyers use to check whether a car is under finance or has any debts attached to it.

So, when a car has finance owing, you can’t just sell it like a fully paid-off car. The lender must be involved in the process to ensure the debt is cleared correctly.

Is It Legal to Sell a Car With Finance Owing?

Yes — but it must be done the right way. Selling a car under finance without telling the buyer or clearing the debt is considered illegal in Australia. It could be viewed as fraud because the lender still has ownership rights over the car.

To do it legally, you must settle or transfer the loan during the sale. Once the loan is paid out, the lender will release their interest in the car, and ownership can transfer freely to the new buyer.

How to Sell a Car That Still Has Finance Owing

If you’ve decided to sell your financed car, here’s a simple guide on how to do it safely and smoothly:

1. Find out how much you still owe
   Contact your lender and request a payout figure — the total amount needed to clear the loan completely. This figure may differ slightly from your regular loan balance, as it includes interest and any final fees.
2. Work out your car’s market value
   Use online valuation tools like RedBook or CarsGuide to estimate what your car is worth. This helps you understand whether the sale will cover the loan or if you’ll still owe money after selling.
3. Decide how to handle the shortfall (if any)
   • If your car is worth more than what you owe, you’ll keep the extra after paying off the loan.
   • If it’s worth less, you’ll need to cover the difference — known as being in “negative equity.”
4. Involve your lender in the sale
   Let them know you plan to sell the car. Some lenders allow the buyer to pay them directly so the loan is cleared instantly. This protects both parties and ensures the transfer is legal.
5. Provide transparency to the buyer
   Be upfront about the finance. Buyers appreciate honesty, and many will still consider purchasing as long as the loan is settled at the time of sale.

Selling Privately vs Through a Dealer

If you’re selling privately, you’ll need to manage the payout process yourself. That usually means:

• Agreeing on a sale price with the buyer.
• Using part of that payment to clear the loan directly with the lender.
• Providing proof to the buyer once the finance is cleared.

If that sounds stressful, another option is to trade it in at a dealership. Dealers often handle the finance payout for you — they’ll contact your lender, pay off the loan, and subtract that amount from your trade-in value. It’s less hassle, though you might get slightly less money overall compared to a private sale.

What If You Can’t Pay Out the Loan?

If you’re in negative equity and can’t afford to pay the difference, selling might still be possible — but you’ll need to work with your lender. They might:

• Restructure your loan into a personal loan (without the car as security).
• Allow a trade-in arrangement through an approved dealer.
• Or permit a voluntary sale, where you sell the car and pay the remaining balance separately.

Each lender has its own policies, so it’s best to discuss your options before making any move.

Can You Sell a Financed Car to a Cash for Cars Company?

Yes — and in many cases, that’s the easiest way to deal with a financed car that’s old, damaged, or no longer worth repairing.

At our cash for cars service, we regularly buy vehicles that still have finance owing. The process is simple:

• We inspect your car and give you a fair cash offer.
• We contact your lender to confirm the payout amount.
• We pay the lender directly to clear the loan.
• Any leftover balance is paid to you on the spot.

It’s completely legal, transparent, and saves you from the stress of handling all the paperwork yourself.

Why Being Honest About Finance Owing Matters

When selling a car with finance, honesty isn’t just the best policy — it’s essential. Buyers can easily check the PPSR, so trying to hide a loan will only cause trouble later. Being upfront builds trust and speeds up the sale process.

A clear, transparent transaction ensures both you and the buyer are protected, and the lender is properly paid out.

Selling a car that still has finance on it might sound complicated, but once you understand the process, it’s completely manageable. Whether you sell privately, trade it in, or go through a cash for cars service, the key is ensuring the loan is paid out before ownership changes hands.

If you’re tired of juggling repayments on a car you no longer need, selling it for cash can be the simplest way out — fast, fair, and hassle-free. Sometimes, clearing the finance and moving on is the smartest financial decision you can make.

 

If you are in Templestowe, and looking to sell your car or get cash for trucks, below is the best way to visit us.

Eastern Cash For Cars
720 High St Rd, Glen Waverley, VIC 3150
(03) 7035 7830
www.easterncashforcars.com.au