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Can you sell a vehicle with finance owing?

07 August 2023

Many Kiwis purchase their vehicles on finance by borrowing money from a lender. This is a great way to be able to buy a new car so you can continue getting from A to B without having to save up thousands of dollars first. You can then just pay off the loan over time in regular instalments. 

However, if you have a vehicle with finance owing that you're still paying off but you decide you want to sell it, you might not be sure whether this is possible or not. 

So, the question is, can you sell a vehicle with finance owing? 

In a nutshell, the answer is yes - you can legally sell a vehicle with finance owing. Whether you want to sell privately to another individual, to a dealership, or trade-in the vehicle, you are allowed to do this. However, the way you do it will depend on the type of loan you have.

Types of loans

Before you sell a vehicle that has financing owing, you first need to know what type of loan you have. Look back at your loan documents or contact the lender to find out which of the following loan types apply to your situation.

Secured Vehicle Loan

If you have financed a vehicle, it's most likely that you have a secured loan. With this type of loan, the lender holds the vehicle as security. If you don't end up paying back the loan in full, the lender can take the vehicle back to recoup its losses. You don't own the vehicle outright until you have fully paid off your loan.

For the person whom you sell a vehicle with a secured loan attached to it, they are taking on a considerable amount of risk. While you can indeed sell the vehicle, if you don't pay off the loan, the buyer of the vehicle may have it taken from them. You'll have to be upfront with the buyer that the vehicle is used as security on your loan and probably won't be able to find someone to purchase the car for this reason.

Realistically, you will have to pay off the loan before you can sell the vehicle, so the buyer is not left with the risk of losing the vehicle. You could do this by using the money from the sale of the vehicle to pay off the loan, or they could pay off the loan for you as their payment for the vehicle. 

Regardless of how you do it, you will need your lender's permission for the sale to occur.

Secured Personal Loan

A vehicle is not the only type of security you can put up against a loan. You may have taken out a secured personal loan but put something else as security, such as a boat or motorbike. In this case, if you fail to pay off your loan, you will still have your vehicle but not the items you put up for security. 

There is no issue with selling a vehicle that is not the security for a loan. The buyer takes on no risk of losing the vehicle if you don't make your payments. Just be aware you'll still be making payments on the loan even though you've sold the car - unless you use that sale money to pay off your debt. 

Unsecured Loan

The final type of vehicle finance you might have is an unsecured loan. This type of loan is far less common, as it doesn't offer a lot of protection to the lender. An unsecured loan is simply a loan of money without anything put up as security or collateral.

Again, as the vehicle is not used as security for this type of loan, you can still sell it with no strings attached.

What are your other options for selling a vehicle with finance owing?

If you really want to sell your financed vehicle, here are a few ways that you can change your loan to make this more feasible.


If you still need the loan but don't want the vehicle to be the security for it anymore, you may be able to apply for refinancing. This way, you could put up different collateral against the loan, enabling you to sell the vehicle more easily.

Use savings 

You'd be surprised how many people have loans but also have money in their savings accounts. If you have enough savings to pay off your loan, this is an easy task and a quick way to detach the vehicle from being security for a loan, enabling you to sell it. 

Apply for a personal loan

Another option you have is to apply for a personal loan that doesn't use your vehicle as security. That way, you can use the money to pay off the secured vehicle loan and sell your vehicle free and clear.

While this option means you still have debt you need to repay, that loan is no longer attached to the vehicle, making it much easier to sell it. 

Stadium Finance Vehicle Loans

If you've successfully managed to sell a vehicle and now you're looking for a new ride, you can apply for a new vehicle loan with Stadium Finance. We can get you into your new set of wheels in no time!

We are a finance company that Kiwis trust to offer no-hassle car loans at reasonable interest rates. Our friendly, helpful team can help you with all of your queries about vehicle loans. Contact us to find out how we can help you today.

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