Can I Sell a Car with a Loan? Discover Your Options

Are you considering selling your car but worried because you still have an outstanding loan on it? You're not alone. Many Australians find themselves in this situation, and while it may seem daunting, selling a car with a loan is entirely possible. With the right information and a strategic approach, you can navigate this process smoothly and without unnecessary stress.

Understanding Selling a Car with a Loan

Before diving into the process of selling a car with an outstanding loan, it's essential to understand the basics. When you take out a loan to purchase a car, the lender typically holds a lien on the vehicle. This means the lender has a legal right to the car until the loan is paid off in full. Selling the car doesn't change this fact; you will need to settle the loan before transferring ownership to a new buyer.

Key Information: Rates, Requirements, and Options

In 2026, the Australian car loan market is quite competitive, with interest rates ranging from 6.49% to 12% depending on your credit score, the lender, and the loan terms. Understanding these numbers can help you manage your expectations and plan accordingly.

Here’s a quick look at some of the key elements you need to consider when planning to sell a car with a loan:

With access to 83+ lenders, Esteb and Co can help you find the most favourable terms tailored to your situation, whether you're looking to pay off your existing loan or refinance.

Steps to Selling a Car with a Loan

Now that you understand the basics, let’s walk through the practical steps to sell your car with an outstanding loan:

1. Determine Your Loan Payoff Amount: Contact your lender to get the exact payoff amount, which includes the remaining principal and any applicable fees.
2. Evaluate Your Car's Market Value: Use online resources to check the current market value of your car. This will help you determine a fair asking price.
3. Choose Your Selling Method: Decide whether to sell privately or trade-in at a dealership. Private sales can yield higher returns, but trade-ins may offer convenience.
4. Negotiate the Sale: Be transparent with potential buyers about the loan. Once a price is agreed upon, collect payment from the buyer.
5. Pay Off the Loan: Use the sale proceeds to pay off the loan. If the sale amount exceeds the payoff, you keep the difference; if not, you'll need to cover the shortfall.
6. Transfer Ownership: Once the loan is settled, obtain a lien release from your lender and proceed with transferring the car title to the new owner.

Tips and Considerations

Here are some expert tips to consider when selling a car with a loan:

• Check for Early Payoff Fees: Some loans have penalties for paying off early. Confirm with your lender to avoid unexpected costs.
• Consider Refinancing: If your loan terms are unfavourable, refinancing might lower your interest rate, reducing your payoff amount.
• Be Prepared for Negative Equity: If your car's value is less than the loan balance, you’ll need to cover the difference.
• Explore Esteb and Co's Lender Network: Our access to a wide range of lenders can help you find the best refinancing options or loans for a new vehicle.

Frequently Asked Questions

1. Can I sell my car if I still owe money on it?
   Yes, but you'll need to pay off the loan before you can transfer ownership to the buyer.
2. What happens if I sell my car for less than what I owe?
   You’ll need to pay the remaining balance out-of-pocket to settle the loan.
3. Is it better to trade in or sell privately?
   Private sales often yield higher returns, but trade-ins offer convenience and speed.
4. How do I find my car's payoff amount?
   Contact your lender to get the current payoff amount, including any fees.
5. What if my lender is holding the title?
   Once the loan is paid off, the lender will release the title, allowing you to transfer it to the buyer.
6. Can I negotiate a lower payoff amount?
   It’s rare, but some lenders may negotiate if you’re facing financial hardship.
7. How long does it take to get a lien release?
   It typically takes a few days to a couple of weeks, depending on the lender.