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This guide will show you how to sell a car under finance.
While you can sell a car that's still under finance, there are a number of potential issues you will need to consider. Note, a car with outstanding finance on it also goes by the name of an encumbered car.
With a secured car loan, it's the car itself that the loan is taken against, not the original buyer. As a result, if you sell the car but fail to repay the loan, the new buyer may find that the lender takes ownership of the vehicle. The buyer must trust that you will pay off your loan in full or else they risk losing the car. This makes your vehicle a less attractive option for potential buyers.
However, it's perfectly legal to sell an encumbered car and you just need to be upfront with potential buyers about the situation. If you wish to sell your car, you should also notify your lender and they will explain how you can pay off your loan.
Most lenders may allow you to sell the car under finance, provided you use the money to then pay off your existing loan. Depending on your loan, you may need to pay additional fees for settling your loan early.
If you used a different asset as security against your car loan or if you opted for an unsecured or personal loan to help purchase your car, you're free to sell the car when you wish, but you will still need to continue making repayments until you have paid off your loan.
If you want to sell a car under finance, you should first be able to answer the following questions:
If you want to sell a car you still owe money on, you can do so by following the steps below:
Regardless of your situation, it will generally be easier to sell your car after you've paid off your existing car loan. You have a number of options when it comes to paying off your loan. These include:
If you have enough in savings, you can use the money to pay off the rest of your loan. Your car will then no longer be considered encumbered and will be easier to sell.
Benefits and drawbacks
If you're struggling to pay off your loan and are trying to sell your car as a result, it may be worth trying to refinance it to help reduce the cost of your loan. If you find a loan with more-favourable terms, you can use it to pay off your existing loan and then continue to make lower repayments on the new loan.
Benefits and drawbacks
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
If you were planning to sell your car in order to upgrade to a new one, a dealer may be able to help you do so. You can trade in your existing vehicle to cover what you owe on your existing loan and then get financing for a better car or downgrade if you're looking to save money. The dealer will often be able to arrange the payment to the lender on your behalf.
Benefits and drawbacks
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You'll receive a fixed rate of 4.88% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.
You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
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