Selling a car under finance

Selling a car while it’s still under finance can be tricky. To help clear up some concern regarding this process we’ve put together a few tips to guide you through the sell process. 


Determine how much you owe on the car before you list 

The first step is to find out what you still owe on the car. Simply call your financial provider or bank and they will be able to indicate how much you owe as well as any fees you may incur by paying off the car. Generally, they can provide you with a formal document confirming your loan balance and any “payout” fees. It’s also a good opportunity while you're on the phone with them to ask whether they have a specific procedure in how you can go about selling your car with finance.  


Determine how you will pay off the remaining loan amount 

You will need to decide how you will pay off your loan and when. Will you be paying it off before advertising your car on carsales or will you use the money from the sale to do so. For many sellers, paying off the car won't be possible without selling the car first. 


Assuring the buyer the remaining finance has been paid off 

If you are using the car buyer’s money to pay off the loan, some buyers won't be comfortable with this type of arrangement. As they cannot be sure that the loan will actually be completely paid off once they purchase the car from you. 

To ease a potential buyer's worry, accompany them to the bank where your car is financed and have an employee explain the situation. If the buyer is still uneasy you may have to use your own money to pay off the loan, or you may need to find a different buyer.  

You can also provide the buyer with a written statement from the financial institution of the exact amount owing, to give reassurance to the buyer that the amount owing is the correct amount. Once the loan has been paid, you can ask your lender for an updated statement to confirm the debt has been cleared. 

Many banks and lenders will accept payment directly from the buyer and this process can sometimes provide more comfort for the buyer. You can also havethe buyer split the payment for the car. One transaction to your bank or lender to discharge the outstanding loan amount and a second transaction for the remainder of the agreed purchase amount to your own bank account.


Taking ownership 

If the buyer has agreed to pay off the owing amount, they will expect the transfer of ownership to take place at this time. Make sure to have all transfer documentation and the vehicle ready for the hand over.  



Buyers may get a vehicle history check on your car that will advise them of the finance situation. Be sure to be upfront and honest about any finance owing on the vehicle from the start. An explanation in your comments section of your ad on carsales is encouraged, as to not scare away any buyers.  



Related articles: 

Buying a car under finance 
How do I check the history of a car? 

Any information on this page is provided as a guide only. It is not professional or expert advice and is not a substitute for such advice. The content may not be appropriate, correct or sufficient for your circumstances and should not be relied on as the only reason you do or don’t do anything.
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