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Can You Sell a Car Under Finance?

Larissa F. Gasperi
Apr 2, 2024 4:49:15 PM

When it comes to selling a car in Australia, the waters can become particularly murky if the vehicle is still under finance. Many car owners find themselves in this situation due to changing needs or financial circumstances. This article aims to demystify the process, providing clear guidance on how to navigate the sale of a financed car legally and ethically in Australia. Understanding your rights, responsibilities, and options is crucial for a smooth transaction. 

Understanding Car Finance in Australia 

In Australia, financing a car typically involves securing a loan, either through a bank, a finance company, or directly from the dealership. This loan is then paid off in instalments over a predetermined period. Until the loan is fully repaid, the finance company holds an interest in the vehicle, meaning it's under finance. This arrangement can complicate the process of selling the car, as the loan must be settled before transferring clear ownership. 

The Legalities of Selling a Financed Car 

Selling a car under finance is legal in Australia, but it involves specific steps to ensure the process adheres to the law. The key legal requirement is transparency; you must inform potential buyers that the car is under finance. Furthermore, the finance company's interest in the vehicle must be cleared before or at the time of sale, usually by paying off the remaining loan balance. Failure to disclose the car's financial status can lead to legal and financial repercussions. 

Steps to Selling a Financed Car 

  • Obtain a Payout Figure: Contact your finance provider to get an up-to-date payout figure, which is the total amount required to clear the loan. 
  • Notify the Finance Company: Inform your lender of your intention to sell the car and discuss the process for settling the loan. 
  • Arrange for Loan Settlement: This can be done by paying off the loan balance yourself before the sale or using the proceeds from the sale to clear the loan. Coordination with the buyer is often necessary to ensure the transaction runs smoothly. 
  • Provide Clear Title to the Buyer: Once the loan is settled, you can transfer ownership to the buyer without any financial encumbrances. 

Selling a car under finance requires careful planning and communication with all parties involved. The next sections will explore options for managing finance when selling and the impact on insurance and warranties. 

Options for Managing Finance When Selling


Selling a car under finance presents a few pathways for managing the outstanding loan: 

  • Paying Off the Loan Early: If financially feasible, paying off the remaining balance before selling can simplify the process. This action removes any liens on the vehicle, making it more attractive to potential buyers. 
  • Loan Transfer to the Buyer: Though less common, some finance agreements may allow for the loan to be transferred to the new buyer. Both parties must agree, and the buyer must meet the lender's credit criteria. 
  • Sale and Loan Settlement: This involves selling the vehicle under finance and using the proceeds to settle the loan. Communication with the buyer is essential to ensure transparency and trust. 

Impact on Insurance and Warranties 

Selling a financed car also means addressing any existing insurance policies and warranties: 

  • Insurance: Notify your insurance company of the sale to cancel or transfer the policy. It’s crucial the new owner arranges their insurance to avoid gaps in coverage. 
  • Extended Warranties: If your car has an extended warranty, check if it's transferable to the new owner. Ausloans’ 5-year warranty options, for instance, can offer added value to the sale if the coverage extends to subsequent owners. 

Advice for Buyers 

For buyers considering a car under finance: 

  • Perform Due Diligence: Obtain a Revs Check (or PPSR report) to verify if there's outstanding finance on the vehicle. 
  • Communicate with the Seller: Ensure the seller is taking steps to settle any outstanding loan. Request proof of loan closure before finalizing the purchase. 


Selling a car under finance in Australia is entirely feasible with careful planning and transparency. Whether you're settling the loan early, transferring it, or coordinating sale and settlement, understanding your obligations and options can lead to a successful transaction. Additionally, considering the impact on insurance and warranties ensures that both seller and buyer are adequately protected. 

For sellers upgrading their vehicle, discussing new car loan options with Ausloans can provide insights into managing the sale of your existing car under finance. Ausloans' expertise and flexible financing solutions, including access to nearly 50 lenders, can aid in finding competitive rates and terms for your new car purchase, ensuring a smooth transition. 

Our team can assist with understanding your financing options, managing the sale of your financed vehicle, and securing the best terms for your next car loan. Discover how Ausloans can make your vehicle financing journey easier and more transparent. 



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