What is simultaneous settlement when buying a car with finance owing?

What simultaneous settlement means

Simultaneous settlement is a process where the buyer’s payment is used to pay off the seller’s existing vehicle finance at the same time as the sale takes place. The lender receives their payout amount, any surplus goes to the seller, and the security interest on the PPSR is discharged — all in one coordinated transaction.

The purpose is to protect the buyer. Without simultaneous settlement, you risk paying the seller and hoping they use the money to clear the finance. If they do not, the lender’s security interest remains active, and the lender can legally repossess the vehicle from you — the innocent buyer.

Why simultaneous settlement is needed

Under the Personal Property Securities Act 2009, a registered security interest follows the vehicle — not the person. If a vehicle has active finance registered on the PPSR and you buy it without the finance being discharged, the lender’s claim transfers to you. They can repossess the vehicle regardless of whether you paid the seller in good faith.

This creates a serious problem for private sales. The seller may intend to pay off the loan with the proceeds, but unless the payout happens as part of the transaction, the buyer has no guarantee it will happen. Simultaneous settlement closes this gap by ensuring the lender is paid directly from the sale proceeds before the seller receives anything.

For a full explanation of the risks, see our guide on what happens if you buy a car with money owing.

How the process works step by step

A typical simultaneous settlement follows these steps:

• 1. Confirm finance exists — run a PPSR finance check to verify the vehicle has active security interests. A RegoVerify Quick Check will show the lender’s details and confirm the registration.
• 2. Obtain a payout figure — the seller contacts their lender and requests a written payout quote. This is the exact amount required to discharge the loan. Payout figures are typically valid for 7 to 14 days and include any break fees or early termination charges.
• 3. Engage a solicitor or settlement agent — a solicitor, conveyancer, or finance broker manages the settlement. They verify the payout figure directly with the lender, hold the buyer’s funds in trust, and coordinate the payment.
• 4. Settlement day — the buyer’s funds are disbursed: the payout amount goes directly to the lender, and any surplus goes to the seller. The lender confirms receipt and initiates the discharge of the PPSR registration.
• 5. Verify discharge — after settlement, run a fresh PPSR search to confirm the security interest has been removed. The lender must discharge within five business days under the PPSA, but always verify independently.

Using a solicitor or conveyancer

While you can technically manage simultaneous settlement yourself, using a professional is strongly recommended. A solicitor or conveyancer provides several critical protections:

• Trust account — your purchase funds are held in a regulated trust account rather than being sent directly to the seller. This prevents the seller from receiving the money and failing to pay off the finance.
• Direct lender communication — the solicitor verifies the payout amount directly with the lender, ensuring the figure is accurate and up to date. They also confirm the lender’s bank details to prevent payment redirection fraud.
• PPSR discharge follow-up — the solicitor monitors the PPSR to confirm the registration is discharged after payment. If the lender delays, the solicitor can follow up on your behalf.

Risks if simultaneous settlement is not done properly

If you skip simultaneous settlement and pay the seller directly, several things can go wrong:

• Seller does not pay the lender — the most common risk. The seller takes your money but uses it for something else. The finance remains active, the PPSR registration stays in place, and the lender can repossess the vehicle from you.
• Payout amount changes — if there is a delay between the payout quote and the actual payment, interest continues to accrue. The payout figure may increase, leaving a shortfall that prevents the finance from being fully discharged.
• PPSR registration not discharged — even if the lender is paid, administrative errors can delay the PPSR discharge. Without a solicitor following up, you may not realise the registration is still active until you try to sell or re-finance the vehicle yourself.
• Payment redirection fraud — scammers can intercept communications and provide fake bank details for the “lender.” Without independently verifying the lender’s account details, the payment could go to a fraudster.

When to use simultaneous settlement

Simultaneous settlement should be considered whenever you are buying a vehicle with active finance registered on the PPSR. In practice, this means:

• Always run a PPSR check first — a RegoVerify Quick Check ($4.99) includes a PPSR search that will reveal any active security interests. If the vehicle is clear, you do not need simultaneous settlement.
• If finance is found — negotiate with the seller about how to handle it. The safest option is for the seller to pay it off first and provide proof. If that is not possible, simultaneous settlement is the next best protection.
• Consider the amount at stake — for a $3,000 car with $1,000 of finance, you might accept a simpler arrangement. For a $25,000 car with $18,000 of finance, professional settlement is essential.

For more on the types of finance that create PPSR registrations, see our guide on novated leases vs chattel mortgages.