Can You Sell a Car With Finance Owing?

When deciding to sell your car, one of the questions many people want to be answered is, “Can you sell a car under finance?” The good news is that you certainly can! However, you need to know a few crucial things before proceeding.

First of all, selling a financed car is not illegal – at least in Australia, since some parts of the world strictly prohibit this activity. However, it is difficult because you’re selling a car you do not technically own. After all, the vehicle you intend to sell is under finance, which means you still owe money on the car loan.

How Much is Still Owed and To Whom?

Now that you know that the answer to “Can you sell a car under finance” is “yes,” the next step is to determine how much you still owe. Don’t worry; it’s very easy, and you probably know this particular detail right now by inspecting your car loan agreement. If you would like to check further, simply talk to your bank or financial provider to get the information you require. Remember to enquire about other fees that you could incur, such as when you pay off the car loan early.

While you are speaking with the lender, you may want to take this chance to ask about their specific procedures when selling a financed car. The procedure can be different from one lender to the next, as well as the loan product you availed.

For example, if the car is under a personal contract purchase, you’re allowed to terminate the agreement early by simply paying your outstanding balance. On the other hand, hire purchases are where the lender is named the car owner until finance is settled.

Borrowing money to purchase a car does not entirely mean the car is encumbered (loaned from a dealership or purchased with a secured loan). If you took out a personal loan or bought it with your credit card, the car is not the security because you used an unsecured line of credit. If you financed your car by redrawing against a mortgage, your car is not the security – it is your house.

How Will You Pay the Loan?

You have two options if you’re selling a financed car:

  1. Pay off the loan before advertising the vehicle or putting it up for sale
  2. Sell the car and use the money to pay for the loan

Many sellers find it much easier to pay off the car loan by selling the vehicle first. The problem with this strategy is that buyers are not attracted to cars with outstanding finance. Additionally, you cannot go about selling the car if the loan is secured against the vehicle itself – that is, without the permission of your lender. Nevertheless, you can sell it as usual if it is secured against something else, such as your house or another asset. Of course, you still have to pay the loan.

If you choose the second option above, where the buyer pays off the car in full, you should get a settlement figure from your lender first, which you will then provide to the buyer.

Knowing how much your car is worth and what you still owe on it means you can now figure out where you stand financially with this particular vehicle.

Give the Buyer Peace of Mind

As mentioned, many buyers are not comfortable with the idea of buying a car with finance owing. Some may even be doubtful and repeatedly ask, “Can you sell a car under finance?” It’s a normal reaction, and you should be prepared to provide them with as much information as you can.

To ease their concern, you can take them to the bank or your lender after you have received the company’s go signal to sell the car under finance. Have the employee or the lender talk to the buyer to explain the situation.

Even after the conversation with the lender, the buyer may still be hesitant to make the purchase – and that’s completely fine. You can proceed to provide them with more assurance, such as the loan statement that shows the amount you still owe. Then, you can request an updated report, which confirms that the debt has been cleared once everything has been settled. If there is still a problem, it may be time for you to move on and look for a different buyer.

What Is the Process of Selling a Car Under Finance?

The steps in selling a financed car are not exhaustive, but the process can drag a little, and you may not get the results you want quickly. Nevertheless, here are things that you should not forget when selling a car with finance owing:

1. Check if Your Car Has Finance Owing

How can you sell a car under finance if you’re not entirely sure if you owe money on it? No matter how interested they may be in your car, buyers will require as much information as you can provide them. Make sure that you talk to your lender or dealer first to know how much you still have to pay to fully own the car. Some lenders may not allow you to sell the car, so don’t advertise it just yet without discussing your plans with them.

A quick way of learning if you still owe money on your loan is to go to For $2, you can know if it is still encumbered or under finance. Bookmark this tip should you wish to purchase a used car in the future.

Another benefit of talking to your lender beforehand is that you can double-check the fees and charges you may have to pay. You are terminating an agreement, which naturally has consequences. Selling a car under finance is a violation of your contract and will therefore result in some penalties.

2. Maximise Resale Value with Proper Car Maintenance

It’s believed that cars depreciate the movement they leave the dealer. Some say they lose a third of their value in about three years. That’s a significant amount of depreciation. If you want to take advantage of your car’s value, you should not wait too long to sell it. But what if it is still under finance? You can either repay the loan before selling or let the buyer pay for it. Either way, you want to sell the vehicle for as much as possible, which you can achieve with proper maintenance.

3. Get the Car Serviced Regularly

Keep a logbook that shows the history of car servicing. Buyers today can be hypercritical when it comes to big purchases like vehicles – and rightfully so. It’s, therefore, your responsibility to provide them with a well-documented service log, which can help boost your car’s resale value. Services should include light checks, including engine light and tyre pressure light. Engine oil levels, tyre tread depths, coolant levels, and air filters are a must.

A well-documented service log can help boost your car's resale value.

4. Replace the Tyres

Get a new set of tyres, which can improve the look of the vehicle in the eyes of the buyer. It also helps to fix the scrapes on tyres and the rim, known as a gutter rash. It costs about $100 but may increase depending on the size and type of blemish.

5. Fix Problems Like Chips, Cracks, and Scratches

Just like old tyres, chips and scratches on the paint are not attractive and can turn potential buyers away from your car for sale. These flaws easily make your vehicle appear dodgy, so be sure to repair them before selling or at least before showing the car to a potential buyer.

6. Give It a Deep Clean and Fill it With Fuel

A filthy car will not sell – unless it is a bargain price, which you do not want. Make sure you vacuum it thoroughly, send it to a car wash, and even give it a buffer. You can always have someone do these tasks for you. Before selling the car, fill up the tank as a courtesy to the buyer.

Can you sell a car under finance? You sure can! Let We Want Your Car WA make things easier for you. Give us your car information by filling out the form on our website or contact us for more information.

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