You’ve found a used car you want to buy privately.
The price looks right.
You’ve inspected the vehicle, spoken with the seller and you’re ready to start organising the finance.
Then you discover something important:
The seller still owes money on the car.
Does that mean you should walk away?
Not necessarily.
A privately sold vehicle can still have finance owing on it, but the existing finance needs to be identified and dealt with properly before or as part of settlement.
If you’re buying a car privately in Blacktown or elsewhere in Australia, this is not something to ignore or leave for the seller to sort out after you’ve paid them.
The existing finance can directly affect how the purchase needs to be completed.
Why Does Existing Finance on the Car Matter?
When finance has been used to purchase a vehicle, the lender may have a security interest registered over that vehicle.
That means the seller owing money and the vehicle being offered for sale are not completely separate issues.
If you’re buying the car, you want to understand whether a security interest exists and how it will be dealt with.
The seller saying:
“Don’t worry, I’ll pay the loan out after you pay me”
is not something you should simply rely on without understanding the settlement arrangements.
If the finance needs to be cleared as part of the purchase, that should be dealt with properly.
How Do I Find Out if Finance Is Owing?
When buying a used vehicle privately, a PPSR search can help identify whether a security interest is registered against the vehicle.
The Personal Property Securities Register, or PPSR, is the Australian Government register used to record security interests in personal property, including motor vehicles.
You will generally need the vehicle identification number, or VIN, to conduct the relevant motor vehicle search.
A PPSR search can also provide information relevant to the vehicle, including whether it has been recorded as stolen or written off.
If you’re buying privately, checking the vehicle before completing the purchase is an important part of understanding what you are actually buying.
The Seller Has Told Me There Is Finance Owing. What Happens Next?
Start by finding out how much is required to clear it.
The seller may need to obtain a current payout figure from their financier.
That figure tells you the amount required to clear the existing finance at the relevant time.
From there, the settlement can be considered properly.
The purchase price, existing finance payout and amount remaining for the seller are all relevant.
For example, suppose you agree to buy the car for:
$35,000
and the seller has an existing finance payout of:
$22,000.
There is potentially $13,000 remaining for the seller after the existing finance is dealt with.
The exact settlement arrangements will depend on the parties involved and the requirements applying to the purchase.
The important point is that the $22,000 debt shouldn’t simply be ignored while the entire $35,000 is paid to the seller.
Does My Lender Pay the Seller’s Finance Company Directly?
That may form part of the settlement arrangements, depending on the lender and the transaction.
Where existing finance needs to be cleared, funds may need to be directed towards the seller’s financier rather than simply paying the entire purchase price to the seller.
Any remaining amount due to the seller can then be dealt with according to the settlement arrangements.
This is one of the reasons private-sale finance can involve more coordination than buying an unencumbered vehicle from a dealership.
Thrive Broking can help you understand what information is required and how the proposed settlement is expected to work.
What if the Seller Owes More Than I’m Paying for the Car?
This is an important situation.
Suppose you agree to purchase the vehicle for:
$30,000
but the seller’s finance payout is:
$34,000.
The sale proceeds alone aren’t enough to clear the existing finance.
There is a $4,000 difference.
That shortfall belongs to the seller’s financial position, not yours simply because you want to buy the vehicle.
The seller may need to arrange for the difference to be dealt with so the existing finance can be cleared.
How that occurs will depend on the circumstances and the financier’s requirements.
If the payout is higher than the purchase price, tell Thrive Broking early.
We need to understand how the existing finance is going to be cleared before the purchase can be completed.
Should I Pay the Seller a Deposit?
Be careful about paying money before you understand the vehicle and the proposed purchase.
A seller may ask for a deposit to hold the car.
Before paying one, understand the terms under which the deposit is being paid and what happens if the purchase cannot proceed.
This is particularly important when you are relying on finance to complete the purchase.
A deposit and its refundability can involve contractual issues separate from the car finance itself.
Thrive Broking can discuss the finance with you, but if you need advice about your legal rights or obligations under a private-sale agreement, appropriate legal advice may be required.
What if the Seller Says They’ll Clear the Finance After Settlement?
This should prompt more questions.
If a security interest is registered over the vehicle, you want to understand how it will be removed as part of the transaction.
Simply transferring the full purchase price to the seller and trusting that they will deal with their lender afterwards can expose you to unnecessary risk.
If you are borrowing to purchase the vehicle, your new lender may also have requirements around the existing finance and settlement.
Tell Thrive Broking as soon as you know finance is owing.
We can then consider the purchase with that information from the beginning.
What if the Seller Doesn’t Know Their Payout?
They can generally contact their financier and request a current payout figure.
The payout may be valid for a particular period or calculated to a particular date.
If settlement doesn’t occur within that period, an updated payout may be required.
An old loan statement showing the approximate balance is not necessarily the same thing as a current payout figure.
When you’re getting close to settlement, the current figure matters.
Why Isn’t the Seller’s Regular Loan Balance Enough?
The amount shown on an account or statement may not necessarily represent the exact amount required to close the finance on the settlement date.
A payout figure is specifically calculated for clearing the finance according to the financier’s requirements.
If the existing finance needs to be discharged as part of your purchase, use the information required for that purpose rather than relying on an approximate figure.
Can I Still Apply for Finance Before the Seller Gets the Payout?
Potentially.
If you’ve found the car and want to investigate finance, you can contact Thrive Broking before every part of the seller’s position has been finalised.
Tell us what you know.
We can start by understanding your circumstances, the vehicle, purchase price and the fact that existing finance is owing.
We can then tell you what additional information is likely to be required as the purchase progresses.
You don’t need to solve the seller’s finance position yourself before speaking with us.
What Information Will Thrive Broking Need About the Car?
The exact requirements can depend on the lender and purchase, but information about the vehicle will generally be important.
That may include:
year, make and model
VIN
purchase price
kilometres travelled
seller details
evidence relating to ownership
details of the existing finance
current payout information
other information required for settlement
If you have the online advertisement, send that through as well.
It gives us a useful starting point for understanding the vehicle you’re considering.
What Information Might Be Needed From the Seller?
Private-sale finance can require the seller to provide information that wouldn’t necessarily be needed in the same way if you were purchasing through a dealership.
Depending on the lender and transaction, this can include information confirming the seller’s identity, ownership of the vehicle and where settlement funds need to be paid.
If finance is owing, information from the existing financier may also be required.
This is worth explaining to the seller early.
If they know you are purchasing with finance, they should understand that some information or documentation may be needed before payment can occur.
What if the Seller Refuses to Provide Information?
That deserves caution.
A legitimate private seller may reasonably ask why certain information is required, and the exact documentation needed can vary.
But if the information is genuinely required to verify ownership, understand existing finance or complete settlement, refusing to provide it can prevent the transaction from progressing.
Don’t try to work around a lender’s settlement requirements simply because the seller wants to be paid quickly.
If something doesn’t make sense, tell Thrive Broking.
What if the Car Is Registered in Someone Else’s Name?
Tell us immediately.
The person advertising or negotiating the sale may not necessarily be the registered owner.
There may be an innocent explanation, but ownership needs to be understood.
Don’t assume that because someone has the keys and is advertising the vehicle, everything required for a financed purchase will automatically be in order.
Private-sale transactions can require ownership information to be verified before settlement.
If the names or information don’t line up, find out why before proceeding.
What if I’m Buying the Car From a Family Member or Friend?
The same basic issues still matter.
Knowing the seller personally doesn’t remove the need to understand the vehicle, ownership, existing finance and settlement.
If finance is owing, it still needs to be dealt with.
Your lender may still require vehicle and seller information.
And the transaction still needs to satisfy the lender’s requirements.
Treat the finance and settlement properly even when you trust the person selling the car.
Does Existing Finance Mean There’s Something Wrong With the Car?
No.
Many people sell or trade vehicles before their car finance has reached the end of its original term.
The existence of finance alone doesn’t mean there is anything suspicious about the vehicle or seller.
It simply means there is another part of the transaction that needs to be handled.
What matters is identifying it and dealing with it appropriately.
What if I Already Paid the Seller Some Money?
Tell Thrive Broking what has happened.
Let us know how much you paid, when it was paid and what the payment was for.
Keep any receipt, transfer record, messages or agreement relating to the payment.
Don’t assume that money already paid can automatically be treated in a particular way by the lender.
We need to understand what has occurred and how it fits into the proposed purchase.
If you are concerned about your legal position regarding money already paid, you may also need appropriate legal advice.
Can the Existing Finance Delay Settlement?
It can add requirements that need to be completed before settlement.
How long those requirements take will depend on the financier, lender, seller, documentation and the circumstances of the purchase.
This is why finding out about existing finance early is useful.
If you discover it the day you expect to collect the car, there may be information that still needs to be obtained.
If you tell Thrive Broking at the beginning, we can factor it into the purchase from the start.
Buying a Privately Sold Car in Blacktown?
If you’re in Blacktown and have found a used vehicle through a private seller, Thrive Broking can help you investigate finance for the purchase.
If the seller has told you finance is still owing, send us the vehicle details and tell us what you know about the existing loan.
If you have the advertisement, VIN or payout information, send those details too.
Thrive Broking assists customers across Australia by phone and online, so we can also help if you live in Blacktown but have found the vehicle somewhere else.
Don’t Ignore Existing Finance Just Because You Want the Car
Finding out that a private-sale vehicle has finance owing doesn’t necessarily mean the purchase has to stop.
But it does mean the existing finance needs to be understood and dealt with.
Find out what is owing.
Understand how it will be cleared.
Make sure the settlement arrangements account for it.
And don’t rely solely on a promise that the seller will sort everything out after receiving your money.
If you’ve found a privately sold car with finance owing, send Thrive Broking the details.
We can start with the vehicle, purchase price and what you know about the seller’s existing finance, then explain what information will be needed to investigate the new finance and move the purchase towards settlement.