Sell a Car with a Loan? Gain Freedom Fast (2026)

You're not alone if you're wondering, "Can I sell a car I have a loan on?" It's a common predicament for many Australians. Whether you're looking to upgrade, downsize, or simply eliminate debt, selling a car with an outstanding loan can seem daunting. However, with the right guidance and planning, it's entirely possible to make this financial transition smoothly.

Understanding Car Loans and Selling

Before diving into the process of selling a financed car, it's crucial to understand the nature of car loans. Typically, car loans in Australia are secured loans. This means that the car itself serves as collateral for the loan. If you fail to meet your repayment obligations, the lender has the right to repossess the vehicle.

When you sell a car that still has a loan on it, you're essentially transferring ownership of an asset that still has a financial obligation attached to it. This makes the selling process a bit more complex compared to selling a car outright. The key is to ensure that the loan is satisfied before or during the sale, so the new owner can take possession without any encumbrances.

Current Market Information and Requirements

As of 2026, the car loan market in Australia offers a variety of options due to the diversity of lenders available, including the 83+ lenders Esteb and Co partners with. Interest rates for car loans typically range from 6.49% to 12%, depending on factors such as your credit score, the loan term, and the lender's policies.

When considering selling a financed car, your first step should be determining the payoff amount. This is the total amount needed to pay off your existing loan, including any interest or fees. You can find this figure by contacting your lender directly.

Steps to Selling a Car with a Loan

Here's a step-by-step guide to help you navigate the process of selling a car that still has a loan on it:

1. Determine the Payoff Amount: Contact your lender to find out the exact amount needed to pay off your loan. Ask whether there are any early repayment fees or penalties.
2. Evaluate Your Car’s Value: Research the current market value of your car using resources like Redbook or Carsales. This will help you set a realistic selling price.
3. Decide on a Selling Method: You can sell privately, trade-in at a dealership, or use a car buying service. Each method has pros and cons, impacting the sale price and speed.
4. Prepare Your Car for Sale: Ensure your car is clean, well-maintained, and all necessary documentation is ready, including the registration papers and service history.
5. Negotiate with the Buyer: Be transparent with potential buyers about the loan status and how you plan to settle it. This honesty can build trust and smoothen negotiations.
6. Complete the Sale: Arrange for the buyer's payment to go directly to your lender to pay off the loan. If the sale price exceeds the loan amount, you'll receive the difference.
7. Transfer Ownership: Once the loan is settled, the lender should release the encumbrance on the car, allowing you to transfer the ownership to the buyer legally.

Expert Tips and Considerations

Selling a car with an outstanding loan comes with several considerations. Here are some expert tips to keep in mind:

• Check for Early Payout Penalties: Some loans may have fees for paying off early. Factor these into your calculations when determining your payoff amount.
• Consider Refinancing: If your car's value is less than the loan amount, refinancing might be an option to lower your monthly repayments until you’re in a better position to sell.
• Utilise Esteb and Co's Lender Panel: Our extensive network of over 83 lenders can provide flexible refinancing options if needed, potentially at a more favourable interest rate.
• Keep Communication Open: Whether it's with your lender or potential buyers, clear and honest communication is key to a smooth transaction.
• Document Everything: Maintain a paper trail of all communications, agreements, and financial transactions related to the sale to protect yourself legally.

Frequently Asked Questions

1. Can I sell my car privately if I still owe money on it?
Yes, you can sell your car privately even if there is an outstanding loan. Just ensure that the loan is paid off as part of the transaction to clear the title for the new owner.

2. What happens if I sell my car for less than the loan amount?
If the sale price is less than what you owe, you'll need to cover the difference to pay off the loan fully. This might involve paying out of pocket or refinancing the remaining balance.

3. Is it easier to trade in my car with a loan at a dealership?
Trading in at a dealership can be more convenient as they can handle the loan payoff process. However, you might receive a lower price compared to selling privately.

4. How long does it take to sell a car with a loan?
The time it takes can vary. Selling privately might take longer due to the need to find the right buyer. Dealerships or car buying services can often complete the process more quickly.

5. Can I negotiate a better payoff amount with my lender?
It’s possible to negotiate with your lender, especially if you’re facing financial difficulties. However, lenders are not obligated to lower the payoff amount unless under special circumstances.

6. What documents do I need to sell my car with a loan?
You'll need the registration papers, service records, loan payoff statement, and any documents proving the lien release once the loan is paid off.

7. Can Esteb and Co assist with selling my financed car?
While Esteb and Co primarily focus on brokering loans, we can provide guidance on refinancing options and connect you with lenders who may offer better terms, facilitating your car sale process.