Are you considering selling your car but still have outstanding finance on it? You might be thinking whether it's possible or legal to do so. The answer is, it depends. In this blog post, we'll explain the process of selling a car with outstanding finance, the different types of finance agreements, and the necessary paperwork you'll need as a seller. We'll also touch on the importance of obtaining a settlement figure from your finance company and the consequences of selling a car on finance without informing the buyer. Keep reading to learn more!

Understanding which type of Finance

Firstly, it's essential to understand the type of finance agreement you have on your car. There are different types of finance agreements, such as Personal Contract Purchase (PCP), Personal Contract Hire (PCH), Hire Purchase (HP), and personal loans. Each agreement has its own rules and regulations when it comes to selling a car with outstanding finance. 

finance

PCP Agreements

If your car is under a PCP agreement, you can sell it at any time as long as you settle the finance, as in a PCP agreement you don’t fully own the car until all the finance has been paid. You'll need to obtain a settlement figure from the finance company, which is the amount needed to pay off the finance in full. You can then use the remaining funds from selling your car to pay off the finance and keep the difference.

PCH Agreements

On the other hand, if your car is under a PCH agreement, you can't sell the car as you never owned it. The car needs to be returned to the dealer at the end of the contract period, and any damages or extra mileage will be charged to you. 

HP Agreements

For cars under an HP agreement, you can only sell the car once you've paid off at least 50% of the finance. You also need to obtain a settlement figure from the finance company, and the buyer needs to obtain credit approval from the finance company to take over the existing finance agreement. The process can be lengthy, but it's a legal way to sell a car with outstanding finance.

Personal Loans

Lastly, if you have a personal loan to finance your car, you can sell the car at any point. However, you'll still need to keep re-paying the monthly instalments.

When selling a car on finance, certain paperwork is necessary, including the finance agreement, V5C registration document, and receipts for payments made. It's important to be transparent with the buyer and inform them that the car has outstanding finance. Selling a car on finance without informing the buyer is illegal, and you could face legal consequences as a result.

pound coins

In conclusion, selling a car with outstanding finance is possible with the right knowledge and legal procedures. Make sure to obtain a settlement figure from your finance company, provide the necessary paperwork to the buyer, and be transparent about the outstanding finance. If you're still unsure about the process, it's always best to seek professional guidance.

Let us help make it easier

If you’re just looking to sell your car with outstanding finance, get in touch with Sell 2 Swansway, our friendly team will guide you through the process and explain how much you’ll have left after paying off your finance.

Or, if you’d rather part-exchange for another car, make an appointment with one of our dealerships to discuss your options.

Category

Tags

Share this article

You May Also Like...