It might seem complicated to sell a car under finance, but it’s completely legal and doable in Australia. If you’re located in Melbourne or anywhere in Australia, this guide will help you understand your options, obligations, and how to sell your financed car quickly and legally with the help of Sell The Car.
What Does It Mean to Sell a Car Under Finance?
When your car is under finance, it means there’s still a loan attached to the vehicle. This loan must be paid out (either by you or the buyer) before legal ownership can transfer. In most cases, the car is considered the lender’s asset until it’s fully paid off.
You’ll need to work with your lender and a trustworthy buyer or car buying service that understands how to settle the finance securely. When a loan is attached, the car is termed as “encumbered.”
Common Seller Pain Points When Selling a Financed Car
Selling a financed car comes with several challenges:
- Difficulty finding buyers who will accept a car under finance
- Unsure of your payout amount and early termination fees
- Dealing with negative equity (when your loan exceeds your car’s value)
- Risk of miscommunication or missed legal steps
- Time consuming listing process on platforms like Facebook Marketplace or Gumtree
Steps to Sell Your Financed Car in Australia
Step 1: Contact Your Lender
Notify your lender of your intent to sell. They will outline their process and provide a list of required documents.
Step 2: Get Your Finance Payout Figure
Request a written payout figure, which includes the remaining balance plus any termination fees. It’s usually valid for 7–14 days.
Step 3: Know Your Car’s Market Value
Determine your vehicle’s value using online tools, dealership evaluations or get a free quote from Sell The Car.
Step 4: Evaluate Your Options
Based on the payout and valuation, you can:
- Pay the loan off in full using savings
- Refinance the loan
- Sell through a dealer that handles finance payouts (like us)
Step 5: Prepare Your Car for Sale
Clean and detail your vehicle, fix any small issues and take high quality photos. Gather paperwork like service records, PPSR certificate and registration.
Step 6: Find a Buyer
List the car online or work with Sell The Car, where we match you with interested buyers who are comfortable with financed vehicles.
Step 7: Negotiate and Disclose
Be transparent with the buyer about the finance. Discuss how the loan will be cleared and who will handle the process.
Step 8: Clear the Finance
If the sale price covers the payout, pay the lender directly. If not, you’ll need to pay the difference (negative equity) before ownership transfers.
Step 9: Transfer Ownership
Once the loan is cleared, complete legal documents, notify VicRoads and provide a bill of sale to the buyer including:
- Make and model
- VIN
- Sale price and date
- Finance status
Car Value vs. Loan Balance: What to Expect
|
Scenario |
Car Market Value |
Loan Balance |
Result |
|
Positive Equity |
$18,000 |
$12,000 |
You receive $6,000 |
|
Break-Even |
$15,000 |
$15,000 |
No profit/loss |
|
Negative Equity |
$10,000 |
$13,000 |
You owe $3,000 |
What If You Have Negative Equity?
Option 1: Make Up the Difference
Pay the shortfall before finalizing the sale.
Option 2: Refinance the Balance
Use a personal loan to cover the remaining loan amount.
Option 3: Sell Through a Dealer Like Us
We can negotiate a solution where you contribute the difference and we handle the payout.
Why Choose “Sell The Car” in Melbourne?
We Handle Payout Directly With Your Lender
Our experienced team will communicate with your lender and settle the loan on your behalf.
Get Paid Fast – Even If You Still Owe Money
Once we assess your car, we’ll deduct the loan balance and pay you the rest (if applicable).
Hassle Free Documentation & Ownership Transfer
We take care of all legal paperwork, including PPSR clearance and VicRoads documentation.
Free Car Valuation and No Hidden Fees
Know your car’s worth before you sell, with no pressure to commit.
Conclusion: You’re Not Stuck — We’re Here to Help
Selling a financed car doesn’t have to be stressful. By staying transparent, following legal steps, and working with experienced professionals like Sell The Car, you can complete the sale with ease. We specialize in buying financed vehicles and handling everything from lender coordination to legal paperwork.
Your Questions Answered: Selling a Car Under Finance
Is it legal to sell a car that still has finance owing in Australia?
Yes. As long as you disclose the finance and clear the loan, it’s completely legal. At Sell The Car, we guide you through the entire legal process to ensure a smooth and compliant sale.
Can I sell a financed car privately?
Yes, but you must inform potential buyers of the outstanding finance. Many private buyers may hesitate to proceed unless the loan is paid off. Sell The Car offers a trusted alternative where we handle finance payouts and provide buyer assurance.
What happens if I sell a car with outstanding finance?
If you fail to disclose the finance, it’s illegal and can result in serious consequences. With Sell The Car, we ensure that all disclosures and financial clearances are handled professionally.
How can I assure my buyer about clearing finance?
Provide them with documentation from your lender confirming that arrangements are in place to clear the loan. We also support you by dealing directly with the financier and giving your buyer proof of payout.
How long does it take to sell a financed car?
With Sell The Car, it can be completed within 1–2 business days, depending on your lender’s response time and paperwork readiness.
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