Selling a car under finance can be a bit tricky, in short, you’ll need to obtain a payout figure from your financier, get a professional valuation on your car, and then negotiate with potential buyers who are open to picking up a car that’s still under finance. It can be difficult to convince people to buy a car that’s under finance, so private sales like Facebook, Carsales or Gumtree aren’t always the best options. Instead, AutoFlip could be a better fit.
At AutoFlip, we list your vehicle to over 1,000 licensed dealers nationwide who competitively bid to secure you a great price. Our verified buyers are experienced with purchasing cars under finance, and with a dedicated sales representative on your side, we negotiate for you to earn the best price.
We also take care of the paperwork and admin, and better yet it’s free to list your car on AutoFlip, so there’s no harm in giving it a crack. Just click this link and enter in your details to get started selling with AutoFlip. If you’re not interested, no worries! We have all the details in the rest of this article below to guide you on selling your financed car privately.
List your financed car, it's free and we look after the rest.
Understanding car finance and encumbrance
When taking out a new car loan, the vehicle is often used as collateral in the finance agreement. Collateral is effectively property that is secured against the loan that reduces the risk for lenders.
If the loan is finalised in this way, the car becomes known as ‘encumbered’ or ‘under finance’. This means that the lender holds an interest in the vehicle until the loan is fully repaid.
Can you sell a car under finance legally?
Selling a car under finance is both legal and possible, as long as specific steps are taken by all parties involved. As the seller, it is your responsibility to make sure the process is followed correctly, disclosing to any potential buyers that the car is encumbered by finance. Failing to do so can not only lead to a loss of trust, it may also violate clauses of the finance agreement and have legal consequences. At AutoFlip, we work with sellers to take them through the relevant steps of selling under finance and sourcing buyers from our network of 1,000+ licensed dealers across Australia.
Preparing and Executing the Sale
Preparing a financed vehicle for sale involves several specific steps to ensure the sale is smooth and legal.
Step 1: Obtain a Payout Figure
Contact your financier and request a payout figure for the amount required to clear the loan. This number should include the remaining loan balance, plus any early termination fees that may be applicable.
Step 2: Value Your Car
Determine your vehicle’s market value to ensure a fair selling price. This can be achieved through using an online valuation tool, checking for listings of similar cars, or obtaining a professional valuation.
Step 3: Find a Buyer
List your vehicle for sale to attract prospective buyers. You can use AutoFlip’s easy-to-use platform to assist you, or you can create a private listing. Remember to be upfront with potential purchasers about the car being under finance.
Step 4: Negotiate the Sale
Come to an agreement with the buyer on the sale price of the vehicle. In your negotiations, remember to factor in both the car’s market value and the payout figure of your finance agreement.
Clearing the finance and finalising the sale
Once you’ve found a buyer for your vehicle, there are a number of steps still to follow when selling a car under finance.
Step 1: Clear the finance
The payout figure must be cleared once the sale price has been agreed upon. If the sale price covers the payout figure completely, you can pay your financier directly. If there is a shortfall, it is your responsibility as the seller to pay the difference.
Step 2: Transfer ownership
After clearing the finance, you’re able to transfer ownership of the vehicle to the buyer. Collate all paperwork and fill out all necessary documents relating to the sale. Remember to inform the relevant authorities of the change in ownership.
Step 3: Provide receipt
Always provide the buyer with a receipt to show that the car is no longer legally yours, and to allow them to easily register it in their name. Include details of the car, including its make, model, VIN and the terms of the sale, such as price, finance status and selling date.
Whether your car is under finance or not, AutoFlip can help you sell it quickly and for the best price
Selling a car under finance requires planning and transparency to ensure a smooth sale. Communicate clearly that the car is under finance and pay off the loan before transferring ownership to the new owner to ensure the car’s history is not impacted.
At AutoFlip, we help simplify the process of selling a car, especially when it’s under finance. AutoFlip can assist the successful buyer and your finance company to complete the transaction without hassle.
We’re committed to providing a user-friendly experience through our online platform, and we have decades of expertise in the automotive market. Our team is always ready to assist with selling your car, regardless of whether you owe money through finance or not.
