Selling a car that’s still under finance can feel like a minefield: lender and bank calls, wary buyers and endless paperwork. But can you sell under finance? Absolutely, and with We Buy Cars buying cars across Brisbane, Logan, Moreton Bay and the Gold Coast, it’s even easier than you think. Read on for our step-by-step guide, plus the key considerations and FAQs to get you from loan-locked to loan-free.
Car finance lets you drive home your dream ride without dropping a lump sum. You borrow from a lender (bank or finance company) and repay in regular instalments (usually over 3 to 7 years). Until the final payment, your lender holds a security interest (your car is “encumbered”). Once the loan’s cleared, you have a clear title, and they issue a Release of Security Interest, and you own the car outright.
Selling a car that’s still under finance isn’t uncommon — and it’s not always about being in financial trouble. In many cases, it’s simply about making smarter choices for the future.
Here are the most common reasons someone may opt for selling their car under finance:
Many people want to switch to a newer model, an EV, or a car with better features before their current loan is paid off. Selling under finance allows them to clear the old loan and move to something they really want or need.
Car loans, insurance, registration, and running costs can add up. If the current car is stretching the budget, selling under finance to buy a cheaper car can free up cash and ease financial pressure.
Maybe the family’s growing and the hatchback isn’t cutting it anymore. Or someone’s swapped the city commute for regional living and now needs a 4WD. Selling under finance is a practical way to switch to a car that fits the new lifestyle.
Cars can depreciate fast. If someone owes more than the car is worth (negative equity), selling sooner can help stop the gap from widening, especially if they plan to switch to a more affordable vehicle.
Sometimes, the car loan is holding up other financial goals, like buying a house or consolidating debt. Selling under finance and clearing the loan can improve borrowing power.
The short answer is, yes, but there are a few important steps and conditions to be aware of:
One of the most common challenges with selling a financed car is negative equity, which is when your car is worth less than the remaining loan. In this case, you’ll need to cover the shortfall when you sell.
If you're in this position, it’s worth thinking about whether now is the right time to sell, or whether it’s smarter to wait until the market improves or you’ve paid down more of the loan. It all depends on your situation and reason for selling the car, and weighing up any additional costs you may encounter down the track if you hold off now, as well as further depreciation.
Some lenders charge a penalty for ending your loan early, especially if you’re still in the first half of the loan term. These early termination fees can eat into your sale profits, so it’s a good idea to check your loan agreement.
If you're selling privately and the buyer needs a loan, their finance approval can delay or even derail the sale. They’ll need to go through their own application process, and if their finance falls through, you're back to square one.
That’s where We Buy Cars can make a big difference. Once we’ve agreed on a sale price, you don’t need to worry about how we’re paying. There are no finance delays, and payment usually lands in your account within just a couple of days.
When selling a financed car to a private buyer, it’s important that the paperwork is completed properly. This includes notifying the lender, paying out the loan, and ensuring the car is clear of any finance before ownership is transferred.
However, with We Buy Cars, you don’t need to do any of that. More on that below.
You can sell to We Buy Cars without paying off the finance first — we’ll handle the loan payout as part of the process.
Here’s how it works:
Chat to us (or get your payout letter first)
You can drop by one of our yards or give us a call to talk through your options. If you already have your payout letter from your lender, that will speed up the process — but if you don’t, no problem. We can guide you on exactly what to ask for when you call your bank or finance company.
Get your payout letter
This document from your lender shows the exact amount you owe, including any fees. It’s essential for finalising the sale and making sure your loan is cleared correctly.
Get your valuation
Complete our quick online form or visit us in-person for an on-the-spot appraisal. We use real SEQ sales data to give you a fair and competitive offer.
Compare the figures
If your car’s value is higher than the payout amount, you’ll receive the surplus. If it’s less, you just pay the difference at the time of sale.
We pay out the loan
Once the price is agreed, we pay your lender directly to clear the finance.
You get any balance
If there’s money left over after the loan is cleared, we transfer it to you, all within a couple of business days.
We lodge the transfer
We lodge the Qld Vehicle Registration Transfer Application (F3520) for you within the 14-day QLD deadline, so there’s no extra paperwork or service centre queues for you.
So, what’s the difference between selling a car under finance privately and selling under finance with We Buy Cars?When your car is still under finance, selling privately can be… complicated (to say the least).
Selling to a private buyer often means:
For many sellers, that process can drag on for weeks — and that’s before you even factor in the time and effort of listing your car, fielding enquiries, and dealing with the frustrations of finding a serious buyer.
The result? A much faster, simpler, and far less stressful experience — especially if you need the sale sorted quickly.
Q. Can I sell my car if I’m behind on repayments?
A: You still can, but if you sell privately, your lender will require the loan to be paid out in full. If you’re in arrears, the payout figure may also include overdue payments and late fees.
Q. Will selling under finance hurt my credit score?
No, as long as the loan is paid out in full and on time. It may even improve your borrowing capacity once the loan is closed.
Q: Can I see my lender’s payout quote before committing?
A: Absolutely. It’s important you have all the information you need before you sign anything.Q: How do I know if a car is under finance?A: Do a PPSR Check. In Australia, you can search the Personal Property Securities Register (PPSR) using the car’s VIN (Vehicle Identification Number) or chassis number.
If the car is under finance, it will show an active encumbrance. If it’s finance-free, it will return a clear report.
With We Buy Cars, selling your car under finance doesn’t have to be complicated.
The biggest hurdles when selling a financed car are usually having to pay out the loan first, finding a buyer, buyer delays, and complex paperwork, which are exactly what we remove from the process.
Our team will guide you step-by-step, answer any questions, sort out the loan and handle the transfer paperwork so you can sell under finance without the stress.Get a fast, fair quote online or give us a call on 2113 5271 and see how easy it is to sell your car under finance with We Buy Cars.
