Last updated: October 2026
“Can I pawn my car and still drive it?” is one of the most common questions people in Victoria search when they need money fast. The short answer is no, not with a true pawn. With a pawn the lender keeps the car. What some lenders offer instead is a loan secured against your car that lets you keep driving. That can work, but it is a different product with different rules and risks. Here is what you need to know before you sign.
Why a True Pawn Means Giving Up the Car
A pawn loan is secured by goods you leave with the pawnbroker. Under the rules set by Consumer Affairs Victoria, pawned goods are held by the pawnbroker until you redeem them, and they must be kept unchanged for at least seven days. With a car, that means the pawnbroker keeps the car and the keys for the whole loan period. You cannot drive it until you pay the loan back.
What “Keep Driving” Car Loans Really Are
When a lender lets you keep the car, the car becomes security for a loan rather than goods held in a shop. These are often called car title loans or car equity loans. The lender records its interest in your car on the PPSR, the national register of security interests. If you stop paying, the lender can take the car.
Because this is consumer credit, the lender generally needs an Australian Credit Licence and must check that the loan is suitable for you and that you can afford it. You can look up a lender on the ASIC professional registers before you apply. A lender that says it is a “pawnbroker” but lets you keep the car should be able to explain clearly which rules it follows.
The Risks of Borrowing Against Your Car
- High costs. Short loans with weekly or monthly fees can work out to a very high yearly rate.
- Repossession. Miss payments and the lender can take the car, and you may still owe money after it is sold.
- Debt that grows. Rolling the loan over adds new fees each time.
- Problems selling later. While the security interest is on the PPSR, you cannot sell the car with clear title until the loan is paid out.
A Federal Court ruling in December 2025 is a reminder to check carefully. A Victorian pawnbroker was found to have charged rates equal to 480% a year, about ten times the lawful limit in Victoria, and more than 2,000 contracts were declared void.
Checks to Make Before You Sign
- Search the lender’s name on the ASIC professional registers.
- Ask for the total amount you will repay in dollars, including every fee.
- Ask what happens if you miss one payment and how much notice you get before repossession.
- Read the contract before you sign and keep a copy.
- Check that the business name on the contract matches the business you are dealing with.
If Your Car Is Repossessed
If a lender takes your car after missed payments, ask for a written statement of what you owed, what the car sold for and any amount still owing. If you think the loan was unfair or the lender was not licensed, you can contact the Australian Financial Complaints Authority or a free financial counsellor on the National Debt Helpline (1800 007 007).
Other Ways to Raise Cash From Your Car
If you can manage without the car, a real pawn avoids repayments while you keep driving, but you lose the use of the car. Our guide on pawning your car in Melbourne explains how that works and what to check, and how to pawn a car covers the steps and documents.
If you do not need the car long term, selling it clears any loan and leaves you with the full value. If the car already has finance owing, we can pay the lender out directly and pay you the difference on the spot. See selling a car with finance and our comparison of pawning vs selling your car.
Our cash for cars service across Melbourne and Victoria gives you a price from photos straight away, with no loan to repay.
Frequently Asked Questions
Can I pawn my car and still drive it in Victoria?
Not with a true pawn, because the pawnbroker holds the car. A loan secured against your car can let you keep driving, but it is a different product with credit rules and repossession risk.
Do car title lenders need a licence?
Lenders offering consumer credit secured on your car generally need an Australian Credit Licence. You can search the lender on the ASIC professional registers.
Can I sell my car if there is a loan against it?
Yes, but the loan must be paid out so the buyer gets clear title. We can pay the lender directly and pay you any balance.
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About the author: Written by Steve, owner of Victorian Car Buyers, a licensed motor car trader (LMCT 12395) based in Delahey, Melbourne.