fbpx

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.
Our authors
   Reviewed by 
Bill Tsouvalas

Reviewer

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.
Our authors



Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.
Car Loans Banner - Man showing his car to a couple before selling it

At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.

In this article

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.

Did you find this page helpful?

Yes
No
Thanks for your feedback!

This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for car loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

In this article

Share this article

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on pinterest

Looking for a car loan quote?

Compare over 40 lenders with Savvy and save on your next car purchase.

* Terms and conditions and lending criteria apply.

Smart money saving tips

Subscribe to our newsletter.

By subscribing you agree to our privacy policy

Related articles

Looking for a car loan?

Explore a range of car finance options with Savvy and get the wheels in motion today. 
Car Loans Banner - Man showing his car to a couple before selling it

We'd love to chat, how can we help?

By clicking "Submit", you agree to be contacted by a Savvy Agency Owner and to receive communications from Savvy which you can unsubscribe from at any time. Read our Privacy Policy.