How to sell a car with finance owing

It is common and it is fine — here is how the payout works and what to ask your lender for.

Yes, you can sell it

A car with a loan against it can be sold — it happens every day. What cannot happen is the car changing hands with the loan still attached, because the lender has a registered interest in it. So the sale has to clear the loan at the same time as the money changes hands.

Get a payout letter

Call your lender and ask for a payout figure — the amount that clears the loan in full as of a given date. They will give you a letter or email stating it, usually valid for a week or two. That letter is what a buyer or dealer needs to see.

How a dealer settles it

The dealer pays the lender the payout figure directly, the lender releases its interest, and whatever is left over from the sale price is paid to you. If the car is worth less than the loan — it happens with newer cars — you pay the shortfall so the loan can be cleared, and the dealer will tell you that number before anything is signed.

This is genuinely easier than a private sale, where you and a stranger have to coordinate a payout in a bank branch and trust each other through it.

Check the PPSR yourself

Run a PPSR check on the car before you sell (ppsr.gov.au, a couple of dollars). It shows exactly what is registered against it, so there are no surprises when the dealer runs the same check.

Keep reading

• What documents do I need to sell my car? →The short list that makes a sale take one visit instead of three.
• How to sell a car in Tasmania →The three ways to sell, the paperwork Tasmania actually requires, and how long each route takes.