Sell a Car with a Loan? Here's How to Gain Control (2026)

Is it possible to sell a car that still has an outstanding loan? It's a question that many Australians find themselves pondering at some point. Whether you're looking to upgrade your vehicle, downsize, or simply need to free up some cash, selling a car with a loan can be a complex process. Fortunately, with the right guidance and information, you can navigate this situation effectively and achieve your goals.

Understanding Selling a Car with a Loan

When you purchase a car with a loan, the lender typically holds a security interest in the vehicle until the loan is fully paid off. This means that the car serves as collateral for the loan, and the lender has a legal claim over it. Until the loan is settled, you technically do not have full ownership of the vehicle. This can complicate the selling process, but it's not insurmountable.

In 2026, many Australians are still financing their vehicles, often opting for loans with interest rates ranging from 6.49% to 12%. Understanding how to sell a car with such a financial obligation is crucial for making informed decisions and ensuring a smooth transaction.

Current Market Information and Options

Before jumping into the selling process, it's important to understand your options and the current market landscape. Here are a few key points to consider:

• Loan Payoff Amount: Contact your lender to get the exact payoff amount, which includes the remaining loan balance and any additional fees or interest.
• Car's Market Value: Determine the current market value of your car. Resources like RedBook or Carsales.com.au can provide estimates based on make, model, year, and condition.
• Equity Status: Check if you have positive or negative equity. Positive equity means your car's value is higher than the loan payoff amount, while negative equity means the opposite.

Steps to Selling a Car with a Loan

If you're ready to proceed, here's a step-by-step guide to help you through the process:

1. Contact Your Lender: Inform them of your intention to sell and request the current loan payoff amount. Clarify any fees or penalties associated with early repayment.
2. Determine Your Car's Value: Use online tools or get an appraisal to establish a competitive asking price. If you have positive equity, you'll have more flexibility.
3. Choose Your Selling Method: Decide if you want to sell privately, trade-in at a dealership, or consider other options like online car-buying services.
4. Negotiate with Buyers: Be transparent about the loan and how it will be settled. Buyers may need assurance that the loan will be paid off and the title transferred.
5. Complete the Sale: Once a price is agreed upon, work with your lender to ensure the loan is paid off. The buyer or their financing party may coordinate directly with your lender.
6. Transfer Ownership: After the loan is cleared, ensure all paperwork is in order and ownership is transferred to the new owner. This step finalizes the sale.

Tips and Considerations

Selling a car with an outstanding loan can be daunting, but these expert tips can make the process smoother:

• Negotiate Loan Payoff: Sometimes lenders are willing to negotiate the payoff amount. It doesn't hurt to ask, especially if you're facing financial hardship.
• Consider Early Loan Repayment: If you have the means, paying off the loan before selling can simplify the process and potentially increase buyer interest.
• Explore Refinancing: If negative equity is a concern, refinancing to a lower interest rate or extending the loan term might reduce your payments and improve your financial situation.
• Leverage Esteb and Co's Network: As a mortgage broking company with access to 83+ lenders, we can help you explore refinancing options or secure a loan that aligns with your financial goals.

Frequently Asked Questions

1. Can I sell my car if I'm still making loan payments? Yes, you can sell your car, but the loan must be settled for the transfer of ownership to be completed.
2. What if I owe more than the car is worth? This is called negative equity. You'd need to cover the shortfall or consider refinancing options.
3. How do I find out my car's loan payoff amount? Contact your lender directly to request the current payoff amount, including any applicable fees.
4. Can a dealership handle the loan payoff? Yes, many dealerships will pay off your loan as part of the trade-in process, but confirm this with them beforehand.
5. What documents do I need to sell my car? You'll need the car title, loan payoff statement, and a bill of sale. Check local requirements for any additional documentation.
6. Is it better to sell privately or trade-in? Selling privately can yield a higher price, but trading in is more convenient. Consider your priorities and financial goals.
7. Do I need to notify my lender if I plan to sell? Yes, it's crucial to inform your lender and understand any obligations or penalties involved in the early payoff process.