Selling a Car with a Loan? Gain Control Fast (2026)

Are you contemplating selling your car but worried because there's still a loan attached to it? You're certainly not alone in this dilemma. Many Australians find themselves in a similar predicament, wanting to sell their vehicle to upgrade or downsize, yet feeling uncertain about the complexities of dealing with an outstanding loan. Fear not, as this guide will unravel the process, offering you clear, actionable advice to navigate selling a car that's still under finance.

Understanding Selling a Car with a Loan

Selling a vehicle that is still under finance can seem daunting, but it's a common occurrence. In simple terms, selling a car with a loan means that you have an outstanding balance with your lender, and you need to settle this debt before transferring ownership to a new buyer. The loan is typically secured against the car, meaning the lender holds an interest in the vehicle until the loan is fully paid off.

In Australia, it's crucial to understand that you must clear the loan before the buyer can gain full ownership. This usually involves obtaining a payout figure from your lender, which is the amount required to fully repay the loan. Once the loan is settled, the encumbrance is removed, and the car can be sold without any legal hindrances.

Current Market Information and Options

As of 2026, car loan interest rates in Australia can range widely based on various factors such as credit score, the amount borrowed, and the lender's terms. Typically, you might see rates between 6.49% and 12%. It's important to understand your financial position and compare your options before proceeding with the sale.

Here is a comparison of potential scenarios you might encounter:

Scenario	Action Required	Considerations
Outstanding Loan Exceeds Car Value	Pay the difference to settle the loan	May require additional funds or refinancing
Car Value Exceeds Outstanding Loan	Sell car and use proceeds to pay off the loan	Surplus funds can be retained
Trade-In with Dealer	Dealer pays off loan as part of transaction	May offer lower value than private sale

The choice of method depends on your financial situation, the car's value, and your urgency to sell.

Steps to Selling a Car with a Loan

Here's a step-by-step guide to help you smoothly sell your car while it's still under finance:

1. Contact Your Lender: Request a payout figure that includes the total amount required to clear the loan. This is essential for understanding how much you need to pay off.
2. Evaluate Your Car's Value: Use online tools or get a professional valuation to know your car's current market value. This helps in setting a realistic selling price.
3. Decide on the Sale Method: Choose between a private sale, dealership trade-in, or selling to a car buying service. Each option has its pros and cons regarding convenience and financial return.
4. Inform Potential Buyers: Be transparent about the loan. Assure them that the loan will be cleared upon sale, and provide evidence of the payout figure if necessary.
5. Complete the Sale: Once a buyer is found, coordinate with your lender to settle the loan using the sale proceeds. Ensure all paperwork is in order to transfer ownership legally.
6. Remove the Encumbrance: After the loan is paid off, the lender will remove their interest from the car. Obtain confirmation of this for the buyer's peace of mind.

Tips and Considerations

When selling a car under finance, consider these expert tips to ensure a smooth process:

• Check for Early Repayment Fees: Some lenders might charge a fee for repaying the loan early. Factor this into your calculations.
• Negotiate with Your Lender: If possible, negotiate for a lower payout figure, especially if you've been a good customer.
• Consider Refinancing: If your current financial situation allows, refinancing the loan might offer better terms or rates.
• Utilise Esteb and Co's Expertise: With access to 83+ lenders, Esteb and Co can assist in finding the most favourable options for refinancing or loan settlement, tailored to your needs.

Frequently Asked Questions

1. Can I sell my car without paying off the loan?

No, you need to pay off the loan before the buyer can gain full ownership. The lender holds a financial interest until the loan is cleared.

2. What if my car's value is less than the loan amount?

This situation, known as negative equity, means you’ll need to cover the difference yourself or explore refinancing options.

3. How quickly can I sell my car under finance?

The timeline depends on how quickly you find a buyer and settle the loan. Generally, the process can take a few weeks.

4. Will my credit score be affected?

Paying off your loan in full can positively impact your credit score by showing responsible debt management.

5. Are there tax implications when selling a financed car?

Typically, there aren’t any tax implications for selling a personal vehicle, but it’s wise to consult a tax professional for your specific situation.

6. Can I use the remaining funds from the sale for another purchase?

Yes, if the sale proceeds exceed the loan balance, you can use the surplus funds as you wish, potentially for a down payment on another vehicle.

7. Can Esteb and Co help with the sale process?

Absolutely, with our network of 83+ lenders, Esteb and Co can assist you in navigating refinancing options and provide guidance on loan settlements.