Sell a Car on Loan? Gain Control & Relief Fast (2026)

Are you currently paying off a car loan but considering selling your vehicle? Perhaps your circumstances have changed, and you need to downsize, upgrade, or simply free up some cash. Whatever the reason, selling a car that's still under finance can be a daunting prospect. But fear not, it's entirely possible and often simpler than you might think. Let's delve into the details to help you navigate this process effectively.

Understanding Car Loans and Selling a Financed Vehicle

When you purchase a car using a loan, the lender places a security interest on the vehicle, meaning they have a legal claim over it until the loan is fully repaid. This is commonly known as a 'secured loan.' If you're looking to sell your car while it's still under finance, you'll need to address this lien before transferring ownership to a new buyer.

In Australia, it's crucial to understand the specifics of your loan agreement. This includes knowing your loan balance, interest rate, and any early termination fees. The goal is to ensure you can settle the loan balance with the proceeds from the sale or through other means.

Current Market Rates and Requirements

As of 2026, car loan interest rates in Australia can vary widely depending on several factors, including the lender, your credit score, and the age of the vehicle. Generally, you might find rates ranging from 6.49% to 12% for new cars, with used car loans sometimes slightly higher.

Before proceeding with the sale, it's essential to check the exact payout figure from your lender. This figure includes the remaining loan balance and any additional fees for early repayment. Be sure to compare this against the estimated sale value of your car.

Steps to Selling a Car Under Finance

Here's a step-by-step guide to help you through the process of selling a car that's still under finance:

1. Contact Your Lender: Inform them of your intention to sell and request a payout figure. This will include the remaining balance and any fees.
2. Determine Your Car's Market Value: Use online valuation tools or consult car sales websites to estimate your vehicle's current market value.
3. Calculate the Shortfall or Surplus: Compare the market value to your payout figure. If your car is worth more, you'll have a surplus. If it's worth less, you'll need to cover the shortfall.
4. Negotiate with Potential Buyers: Be transparent with buyers about the car being under finance. Many buyers are willing to accommodate this if the process is straightforward.
5. Finalize the Sale: Once an agreement is reached, use the sale proceeds to pay off the loan. Ensure your lender removes the lien, so the buyer can register the car in their name.
6. Documentation: Provide the buyer with a receipt of sale and any necessary documents showing the loan has been settled.

Tips and Considerations

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

• Check for Any Fees: Be aware of any early repayment penalties or administration fees.
• Consider Refinancing: If you're facing a shortfall, you might explore refinancing options through Esteb and Co's extensive panel of 83+ lenders.
• Consult a Professional: A financial advisor or mortgage broker can provide guidance tailored to your financial situation.
• Timing the Market: Selling at the right time can maximise your sale price. Consider market trends or seasonal fluctuations in car prices.
• Prepare Your Car: Ensure your car is in good condition before sale to achieve the best possible price.

Frequently Asked Questions

• Can I sell my car if I still owe money on it?
  Yes, you can sell your car even if it’s under finance. You need to pay off the loan to release the lien before transferring ownership to the buyer.
• What if the sale price doesn't cover the loan amount?
  If the sale price is less than the loan payout figure, you'll need to pay the difference out of pocket or explore refinancing options.
• Do I need to inform the buyer that the car is under finance?
  Yes, it’s crucial to be transparent with buyers about the car's financial status to avoid any legal issues.
• Can I trade in a financed car?
  Yes, trading in a financed car is an option. The dealer will typically pay off the loan as part of the trade-in process.
• What documents are required to sell a financed car?
  You'll need to provide a settlement letter from your lender, a receipt of sale, and proof that the loan has been paid off to facilitate the transfer of ownership.
• How long does it take to settle the loan after selling the car?
  This can vary, but typically it takes a few business days to receive the payout figure and process the settlement.
• Is it possible to sell a financed car privately?
  Yes, selling privately is possible and often yields a better sale price, though it requires more effort in terms of finding a buyer and managing the loan settlement.