Are you wondering if it's possible to sell a car that is still being financed? While it may not be as straightforward as selling a car you own outright, it is definitely possible. However, there are a few key things you need to keep in mind.

Firstly, it's important to understand that you don't actually own the car until you have paid off the total finance amount. This means you won't be able to sell it until then. The process varies depending on the type of car finance you have. With a hire purchase loan, you become the owner of the car once you have completed the agreement and paid the 'Option to Purchase' fee. On the other hand, with PCP car finance, you have more options when the loan term ends. You can choose to hand the car back, use any positive equity as a deposit for a new deal, or make the final 'balloon payment' to buy the car.

But what if you don't want to wait until the end of your finance agreement? Good news - there are ways to sell a car with finance.

The first step is to request a settlement figure from the finance company. This figure will be the total amount remaining on the finance, including interest, minus the deposit and any repayments you have already made. If you decide to sell your car to a dealership, they may offer to pay the settlement figure as part of the deal. By understanding the process and knowing your options, you can successfully sell a financed car before the end of your loan term.

Settling Outstanding Finance

In order to sell a car with outstanding finance, you must first settle the finance and become the legal owner of the vehicle. Selling a car on finance without informing the buyer of its status is illegal and could result in legal consequences. Remember, the lender maintains ownership of the car until the finance is fully settled. You can settle any remaining finance by calling the finance provider and arranging paying off the amount.

What is a settlement figure?

A settlement figure is the amount of money still owed on a car finance agreement, including any interest. It is calculated by adding up the remaining monthly payments and subtracting any future interest that does not need to be paid.

Once you request a settlement figure from your lender, you will receive a written copy that is typically valid for 28 days.

Women looking at phone in front of a laptop and paperwork
pcp diagram

Selling a car on PCP finance?

With PCP finance, you do not become the legal owner of the car until you reach the end of the agreement and make the final "balloon payment". If you wish to sell the car before this point, you must first pay the settlement figure.

The PCP car finance settlement figure includes any outstanding finance payments, interest, and the final balloon payment amount.

Selling a car on HP finance?

HP finance differs from PCP in that you cannot simply return the car at the end of the loan term. This may result in higher monthly repayments as you work towards car ownership. Technically, the lender remains the legal owner of the vehicle until the agreement is completed.

To sell a car with HP finance, you must pay the settlement figure. This figure is calculated by adding up the remaining monthly instalments and deducting any future interest that does not need to be paid. Generally, the longer you are into the agreement, the lower the settlement figure will be. However, it is important to review the terms and conditions in case an early settlement fee is required.

A Step-by-Step Guide to Selling a Financed Car

So, you've made the decision to sell your financed car. What's the next step?

  • Contact your finance provider for an up-to-date settlement figure, usually valid for 28 days.
  • Check if there are any early settlement fees that apply.
  • Clear your finance and transfer the car into your name.
  • You now have the freedom to sell the car privately or to a dealer.

Remember, it's essential to settle your agreement and clear any outstanding finance before selling your car. Selling a car with outstanding finance is illegal. Follow these steps to ensure a smooth and legal sale.

Woman selling her car



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