Sell a Car on Loan? Here's How to Gain Control

Are you stuck with a car that you're still paying off and wondering if you can sell it? You're not alone. Many Australians find themselves in this situation, and navigating the complexities of selling a car that's still under finance can be daunting. This guide will provide you with all the information you need to make an informed decision and take the necessary steps.

Understanding Selling a Car Under Finance

Selling a car that still has an outstanding loan can seem tricky, but it's entirely possible. When you purchase a car with a loan, the lender typically holds a security interest over the vehicle. This means they have a claim on the car until the loan is fully paid off. If you're looking to sell, you'll need to clear this loan to transfer the ownership effectively.

Rates, Requirements, and Options

Before diving into the process, it's essential to understand the current financial landscape and the options available to you. The car loan market in 2026 is competitive, with interest rates ranging from 6.49% to 12%, depending on factors such as your credit score, the loan term, and the lender.

The eligibility criteria for selling a financed car generally include having a clear understanding of your loan's payout figure, which is the amount required to completely pay off your car loan. This information can be obtained from your lender.

Steps to Selling a Car Under Loan

1. Determine Your Loan Payoff Amount: Contact your lender to find out the exact amount you need to pay to satisfy your loan. This is crucial as it will inform your selling price.
2. Valuate Your Car: Use online tools or seek a professional appraisal to determine your car's current market value. This will help you set a competitive selling price.
3. Find a Buyer: Advertise your car through online platforms or local classifieds. Be upfront about the financing situation to avoid any surprises for potential buyers.
4. Negotiate the Sale: Once you have a buyer, negotiate a price that covers the loan payoff and any additional costs. Remember to factor in any early termination fees from your lender.
5. Settle the Loan: Use the proceeds from the sale to pay off the loan. You may need to visit the lender's office with the buyer to finalise the transaction.
6. Transfer Ownership: Once the loan is cleared, you can transfer the car's ownership to the buyer. Ensure all paperwork is completed correctly to avoid future liabilities.

Tips and Considerations

• Check for Early Repayment Fees: Some lenders may charge a fee for paying off your loan early. Include this in your calculations when assessing your payoff amount.
• Explore Other Loan Options: If selling the car isn't feasible, consider refinancing your loan. Esteb and Co can assist in finding a more favourable loan from our panel of 83+ lenders.
• Understand the Tax Implications: Selling a car can have tax implications, especially if there is a significant difference between the sale price and the loan payoff. Consult with a tax professional if needed.
• Maintain Transparent Communication: Keeping your buyer informed about the loan situation helps build trust and ensures a smooth transaction.

Frequently Asked Questions

1. Can I sell my car if I'm still paying off the loan?
   Yes, but you'll need to pay off the remaining loan balance to transfer ownership legally.
2. What happens if I sell my car for less than the payoff amount?
   If the sale proceeds don't cover the loan balance, you'll need to pay the difference out of pocket.
3. How do I find out my car's loan payoff amount?
   Contact your lender directly to get the most accurate and up-to-date payoff amount.
4. Can I negotiate with my lender for a lower payoff amount?
   It's unlikely, but you can always discuss your situation with your lender to explore any possible options.
5. Is it better to refinance my loan instead of selling?
   This depends on your financial situation and goals. Refinancing may lower your interest rate or monthly payments, making it an option worth considering.
6. Does selling my car affect my credit score?
   Selling your car and paying off the loan can positively affect your credit score by reducing your debt load.
7. Can Esteb and Co help with my car loan needs?
   Yes, our experienced brokers can connect you with over 83 lenders to find a car loan solution that meets your needs.