8 common mistakes to avoid when selling your car
The 8 most common mistakes when selling your car privately in Australia — from overpricing to the Notice of Disposal most sellers forget to lodge.
Selling a car under finance? Here's how it works
Yes, you can sell a car that still has a loan on it. It happens every day. The finance doesn't stop the sale. It just means the outstanding loan has to be cleared as part of the transaction. Once you understand how that works, the process is straightforward.
Can you legally sell a car with finance owing?
Selling a car under finance is legal, but there's a mechanism you need to understand first.
When you take out a car loan, your lender registers a security interest on the PPSR (Personal Property Securities Register), a national government database that records financial interests in personal property, including vehicles. That registration signals to any potential buyer that money is owed against the car. If the loan isn't paid out, the security interest stays with the car, not the seller. A new owner could inherit the debt, and the lender would have the right to repossess the vehicle even after the sale.
This is why the finance must be discharged (formally cleared) before or at the point of sale. Once the loan is paid out, the lender removes their registration from the PPSR, and ownership can transfer cleanly to the buyer.
How it works when selling privately
If you're selling privately, you have two paths.
The first is to pay out the finance yourself before listing. Contact your lender and request a payout figure: the exact amount needed to clear the loan in full, including any applicable fees or break costs. This figure is valid for a set period (often 30 days), so request it when you're close to completing the sale, not months out. Once you've paid it out, the lender releases the PPSR registration and you can sell the car unencumbered.
The second path is to coordinate the payout at settlement. Some private buyers and their solicitors are comfortable with this arrangement, but it requires trust and careful coordination. The buyer pays the lender what is owed directly, and the balance comes to you. It's common when there's a mortgage broker or conveyancer involved, but for a straightforward private sale between individuals it can get complicated quickly.
Either way, you need the loan fully settled and the PPSR registration removed before the car changes hands.
