Selling a car with unpaid finance can seem like a daunting and complex process for car owners, and can sometimes put people off selling their car. However, it is possible to sell a car with owed finance, as long as you understand the necessary paperwork and process involved. In this article, we'll explore the various finance agreements and provide useful tips on what you need to know when selling a car with outstanding finance.

PCP or Personal Contract Purchase

PCP or Personal Contract Purchase is a popular finance option for many car owners. With PCP, you make fixed monthly payments for a set period of time, with the option to either return the car or pay the final big payment (also known as a balloon payment) to own the car outright. If you want to sell a car on PCP, you first need to obtain a settlement figure from the finance company. This is the amount you need to pay to settle the finance agreement in full. Once you have this figure, you can work out how much you’ll have left over from the sale of the car. You can then use this money towards a deposit for a new car or pay off any remaining debt. 

PCH or Personal Contract Hire

PCH or Personal Contract Hire is similar to PCP, but you don't have the option to buy the car at the end of the agreement. With PCH, you simply lease the car for a set period of time and then return it to the finance company. Unfortunately, you cannot sell your PCH car. You can end the contract early if you need to, but this can be expensive.

HP or Hire Purchase

HP or Hire Purchase is a finance agreement where you make fixed monthly payments and at the end of the agreement, you own the car outright. If you want to sell a car before the end of your HP contract, you will need to obtain a settlement figure from the finance company. This is the amount you need to pay to settle the finance agreement in full. Once you have this number, you can easily work out what money you’ll make from the sale. 

Personal Loan

Selling a car with a personal loan can be less complicated than selling a car on other types of finance agreements. Since the loan agreement is between you and the finance company or bank, and the loan is not secured against the value of the car, you can sell the car. 

Remember that you'll still owe what remains of the loan even after selling the car, and you need to continue making regular repayments, but you could use the sale proceeds to pay off the remaining loan amount and clear the debt.

Writing in documents

Selling a car on finance requires certain paperwork

When selling a car on finance, it’s important to keep all the relevant paperwork together. This includes: 

  • The finance agreement
  • The V5C registration document
  • Any receipts for payments made

You’ll also need to provide a sale receipt for the car, which should include the seller’s full name and address, the buyer’s full name and address, the make and model of the car, the registration number, the sale price, and the date of sale.

We should say that selling a car on finance without informing the buyer is illegal. You must inform the buyer of any outstanding finance and provide them with the relevant paperwork. Failure to do so could result in legal action being taken against you.

So, can you sell a car with outstanding finance?

Yes, it is usually possible to sell a car with outstanding finance. As long as you don’t have a PCH contract, you can obtain a settlement figure from the finance company and inform the buyer of any outstanding finance. If you’re looking to sell your car on finance, consider Sell 2 Swansway, who can help you navigate the process and provide a hassle-free selling experience. Chat to one of our team now, or get a fast and competitive car valuation.

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