How to Sell a Car Privately with Outstanding Finance

Find out how to sell your car privately, even if it has outstanding finance attached, right here in Savvy’s handy guide.
Published on August 14th, 2023
  Written by 
Adrian Edlington
Adrian Edlington is PR & Communications Manager at Savvy. With a keen interest in personal finance, car loans, the mortgage industry, cost of living pressures, electric vehicles and renewable technology, Adrian's research includes conducting primary data surveys and analysis of up-to-the-minute secondary Australian data sources. His work on behalf of Savvy has been featured on ABC.net.au The Conversation, the Sydney Morning Herald, AFR, News.com.au, The Age, Herald Sun, Adelaide Now, SBS On The Money, 7News, Car Expert, Which Car, Drive.com.au and more. In his spare time, Adrian enjoys mountain biking and business podcasts.
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   Reviewed by 
Bill Tsouvalas


Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Selling a car privately can be a quick and convenient way to get a good price for your vehicle. However, when you're looking to sell a car with outstanding finance, the process can become a bit more complex. Savvy’s comprehensive guide can walk you through the steps of selling a car privately with outstanding finance, as well as how to improve your chances of a successful sale right here.

What does it mean when my car has outstanding finance?

Having your car under finance simply means you still owe your lender money on the car loan you used to purchase it. Depending on the size of the loan you took out initially and your vehicle’s value today, your outstanding debt may be more or less than what your car would sell for in a private sale.

It’s important to note, however, that outstanding finance isn’t exactly the same thing as being encumbered. In most cases, if you're still paying off a secured car loan, your vehicle will fall under both categories. However, if you used an unsecured loan for the purchase, the car may be under finance without being encumbered. This means your lender doesn’t have an interest or stake in the car and you can sell it without having to notify them.

What are my options for selling my car with outstanding finance?

There are two main options when it comes to selling a car with an outstanding loan debt attached:

  1. Paying off your loan debt before selling the car: your lender may require you to pay the full balance of your loan, including interest and any potential break fees, before you can sell it privately. This can also improve your chances of a successful sale, as buyers may not be as forthcoming when it comes to buying a car with outstanding finance due to its inherent risk.
  2. Using the sale funds to pay off the debt: the main alternative to this is arranging for the buyer of your car to pay off the balance of the loan in the process of purchasing your vehicle. You’ll need to arrange this with the buyer and maintain full transparency. If the amount you're selling your car for is greater than the remaining loan debt, you can arrange for the difference to be paid to you.

How do I sell a car privately while it’s still under finance?

  • Speak with your lender: before you begin the process of selling your car, reach out to your lender to discuss your situation. This will help you determine whether you’ll have to pay off the loan in full before selling the car or if you’re able to have the buyer pay your lender instead. They’ll provide you with a payout figure, which is the amount required to pay off your debt, inclusive of interest and potential fees.
  • Assess the car's value: research the current market value of your car. You can use online platforms, car valuation tools or seek guidance from professionals. Understanding your car's worth will help you set a reasonable selling price which takes the outstanding finance into account and helps ensure you receive a fair deal.
  • Communicate with the buyer: it’s essential to be transparent with potential buyers about the outstanding finance. Inform them of the situation and what your intention is with the remaining debt, bearing in mind they’ll be able to check if your car is under finance.
  • Complete the sale: once you have a buyer and the agreed-upon payment, work with them to arrange the sale. This will involve either you having already paid this amount out to the lender or arranging for the seller to transfer the funds to them directly.
  • Transferring ownership of the car: after the outstanding finance is settled, you can proceed with transferring ownership to the buyer. You’ll need to complete a Notice of Disposal form and any other required documentation through the relevant state or territory authority. This ensures the change of ownership is properly recorded.

Can I sell my car through a dealership if it still has finance outstanding?

Yes – selling your car through a dealership is another option if it still has finance outstanding, but there are a few important steps to follow. First, you need to contact your lender and obtain a payout figure (as is the case when selling privately). Once you have this figure, you can compare it to the dealership's offer for your car.

If the dealership's offer is higher than the payout figure, they can pay off the outstanding finance directly to your lender. If the dealership's offer is lower, you'll need to pay the difference to settle the loan before selling.

It's crucial to coordinate with both the dealership and your lender to ensure a smooth process. The dealership will usually handle the paperwork and administrative tasks involved in paying off the loan and transferring ownership. Keep in mind that while selling through a dealership can simplify the process, you might not get as much for your car compared to a private sale.

Alternatively, if you’re looking to upgrade your vehicle, you could trade it in for another car. In doing so, you can offload your current vehicle and its associated debt (if the dealer’s offer is enough to cover it) and receive your next model immediately. You may either take on a new loan to pay for your more valuable car or pocket the difference if you’re downgrading.

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