Value Your Car! Call 0800 689 3645

FAQ: Selling Your Car With Outstanding Finance

Buying a car on finance schemes is becoming more and more popular, especially for young people who want a newer car. Sometimes you need to get rid of the car before finishing all payments. Some issues surrounding finance and selling your car can be very serious and even lead into some people accidentally selling their car illegally. So we’re here to tell you how you can do this professionally and legally…

Selling a Car With Outstanding PCP or Hire Purchase Finance

In short, you cannot do this. If you have outstanding finance on your car and decide to sell it without telling the buyer finance payments still need to be made, you would be breaking the law. Until the finance is settled in some way (until you reach the end of your financial term), then the car is still owned by the company and not you, so it is in no way yours to sell.

If you do want to sell the car then you can, as long as you settle the finance agreement first. Luckily, you have the right to end a financial agreement early at any stage you want to. If you took out finance after February 2011, then you will have been given full details of the rights for you and your lender when you began your policy.

Ending Your Finance Term Early

The first point of call in this process is to contact the company that provides your finance- their details should be on the paperwork they supplied. From here ask for something called the ‘settlement figure.’ This will be a total of everything you need to pay to end the finance agreements and it may include various additional charges such as an ‘early exit fee’ on top of the amount you already owe. It will also detail the ‘settlement date’ which is the date in which payment must be made by. Bear in mind that once you have made the payment to settle the loan, you cannot change your mind at a later date.

If you miss the settlement date, then you will have to ask for a new settlement figure. However if you do complete it by the settlement date and have a deal to buy the car from the finance company, then the car is yours to sell.

Finalising All Payments

You will have to organise all of these steps yourself as it is all under your name, however, it is sometimes possible that a retailer or company will arrange to pay off the outstanding finance as part of the deal to buy your car.

Selling Your Car To Pay Off The Finance

This may sound useful, but unfortunately, you will not be able to do this as you can only sell the car once the payments have been settled in the finance agreement, or you can sell the car as part of a refinancing deal.

Given the charges that could be involved when ending the finance agreement too early, it’s possible the car could end up being worth less than the settlement figure which would leave you in negative equity.

Selling Your Car While Paying Off a Loan

This is something you can do. Paying off a loan is completely different from when you’re paying off finance. The finance deal is secured against the car, but there is absolutely no link with a personal loan. The car is your property from the first day, and you can do what you want with it. However, remember even when you have sold the car, you will have to finish paying off the loan. Unlike finance though you could use the money from selling the car to do this.

If you have paid off your finance on your car and you’re looking to sell, give us a call on 0800 689 3645 or visit our website to sell your car with us.