Can I Sell My Financed Car?

Thinking about selling your car, but you bought it with finance? You can, and here's how.

Whether it's time for an upgrade or you'd like to free up some cash, selling a car that's on finance is possible, but there are a few extra steps. Here's how it works, step by step, plus how to swap your loan to another car if you're upgrading.

At Instant Finance, our car loans let you act like a cash buyer at a car yard, but if you sell your car on, you're still responsible for paying your loan off. You can always talk to us about your situation, and we'll help you work out your options.

Selling a car on finance at a glance

• Yes, you can sell a car that's on finance in NZ, but the loan needs to be dealt with first if the car is security for it.

• Start by finding out how much you owe and whether the car is security for your loan.

• Paying off early? Unused interest and admin fees are rebated, and there's a $25 fee.

• Upgrading? You may be able to swap your loan to your new car instead of paying it off (a $50 variation fee applies, plus a small PPSR fee).

• Owe more than the car is worth? You'll need to cover the difference, so it's worth checking before you sell.

How to sell a car on finance: step by step

1. Find out how much you owe

Ask your lender for a payout figure: the amount needed to pay off your loan in full today. If your loan is with us, just contact us and we'll let you know.

2. Check whether the car is security for your loan

If the car is security for your loan, it can't simply be sold without the loan being dealt with first. You can check through the Personal Property Securities Register (PPSR), a free public register, or ask us.

3. Work out what the car is worth

Look at what similar cars are selling for, and compare that with what you owe. If the car is worth more than your payout figure, the difference is yours. If it's worth less, you'll need to cover the gap (more on that below).

4. Choose how you'll settle the loan

• Pay it off when you sell. The sale money goes towards paying off your loan, and any shortfall is up to you.

• Trade it in at a dealer. Many dealers will pay out your loan as part of the trade-in.

• Swap your loan to your new car. If you're buying another car, you may be able to move your loan across instead of paying it off (see below).

5. Complete the sale

Only transfer ownership once the loan is paid off or the security has been released, so the buyer gets the car free of any money owing.

Secured or unsecured: what it means when you sell 

An unsecured car loan is where there's no personal property attached to the loan. If this is the case for your loan, you can go ahead and sell your car, but you'll still need to keep paying the loan as normal.

A secured car loan is where the car or another personal property is attached to the loan as security. The lender's interest stays registered against the car until the loan is paid off or the security is moved to another car, even if the car has been sold. That's why it's important to deal with the loan before you sell.

If the car is the security: talk to your lender first

If your loan is secured by the car you want to sell, speak with your lender about your options before you sell it. Contact us and we'll talk you through them.

If something else is the security 

If your loan is secured by a different item (not the car), you can sell the car as normal, but you'll still need to keep paying off the loan. Remember, you can't sell the item the loan is secured on.

Can you swap finance from one car to another?

Yes, if your loan is with us. If you're upgrading and your current car is the security for your loan, you don't need to pay the loan off first. As long as your new car is worth the same or more, your loan can usually move across to it. This is called a security swap.

• What you owe: your existing loan balance moves to the new car.

• If the new car costs more: you can pay the difference yourself, or you may be able to top up your loan, as long as the extra repayments fit your budget. That would increase your total amount borrowed, and may change your loan term.

• What it costs: a $50 variation fee, plus a PPSR registration fee for the new car (from $8.05).

Not sure how much you could borrow for the upgrade?

See how much you can borrow for a car, or get in touch and our team will talk you through it.

What if you owe more than the car is worth?

Cars lose value over time, so sometimes you'll owe more on your loan than the car would sell for. For example, if you owe $20,000 and the car is worth $15,000, you'd need to find the $5,000 difference to pay off the loan when you sell. Before you sell or trade in, check your payout figure against the car's value, so there are no surprises.

 

Finding your repayments harder to keep up with? 

If you're thinking of selling because your repayments are getting harder to manage, talk to us as early as you can, before you sell.

There may be other options that work better for you, and our team would much rather help you find a way forward. Contact your local branch or get in touch online.

Selling your financed car: FAQs

Can I sell a car that's on finance in New Zealand?

Yes. If the car is security for your loan, the loan needs to be paid off, or the security moved to another car, before ownership changes hands. If the loan is unsecured, you can sell the car but you'll still need to keep up your repayments.

What's the best way to sell a car that's financed?

Start by getting your payout figure and checking the car's value. If you're buying another car, swapping your loan to the new car can be simplest. If you're selling outright, use the sale money to pay off the loan before you transfer ownership.

Can I do a trade-in if I still owe money on my car?

Yes. Many dealers will pay out your loan as part of the trade-in. If your loan is with Instant Finance, you may also be able to move your loan across to your new car instead.

Can I transfer my finance from one car to another?

If your loan is with Instant Finance, you may be able to, as long as the new car is worth the same or more. This is called a security swap. A $50 variation fee applies, plus a small PPSR registration fee.

What happens if I sell a car with outstanding finance?

If the car is security for a loan, the lender's interest stays registered against the car until the loan is sorted, even after it's been sold, which can cause problems for you and the buyer. That's why the loan should be dealt with before ownership changes hands. Buyers can check the PPSR to see if money is owing on a car.

Will the finance company know if I sell my car?

Usually, yes. If your loan is secured against the car, the lender's interest is registered on the Personal Property Securities Register, which buyers and dealers check before they buy. Selling a car that's security for a loan without sorting the loan first can also breach your loan agreement, so it's best to talk to your lender before you sell.

Can I cancel my car finance and give the car back?

Not simply by handing the car back. Your loan is an agreement to repay what you borrowed, and returning the car doesn't automatically clear what you owe, especially if the car is worth less than the loan. If you're finding repayments hard, talk to your lender early about your options.

What's the smartest way to get out of a car loan?

The simplest way is to pay it off early. With Instant Finance, unused interest and admin fees are rebated, and there's a $25 fee. You can also sell the car and use the money to pay off the loan, or, if you're upgrading, move the loan to your new car.

I owe more than my car is worth. Can I still trade it in?

You can, but you'll need to cover the difference between what you owe and what the car is worth, so check your payout figure against the car's value first. Talk to our team about your situation.

Can I refinance my car loan to get another car?

If your loan is with Instant Finance, you may be able to move it to your new car and, if the new car costs more, top it up, as long as the extra repayments fit your budget. Talk to our team about your situation.

Thinking of selling your car? Get in touch 

Whether you're selling, trading in or upgrading, talk to us first and we'll help you work out the best option.

Looking for your next car? See our car loans, read our tips on how to buy a car, or our guide to how to finance a car in NZ.

Interest rates range from 9.95% to 29.95% p.a., depending on your circumstances.

We won't let you get in over your head: we'll go through your budget with you to make sure the repayments fit.