Thinking of Selling a Financed Car? Here's What to Consider
Understand the process before selling your car if you still owe money. Let's learn how to sell a car with outstanding finance in this guide.
This is one of the most typical questions drivers have when changing vehicles before the finance agreement finishes. The answer depends on finance kind and contract details.
You can sell a car under financing or clear the balance before selling. This article will explain your options and ensure everything is done legally and correctly.
Can You Sell a Car with an Outstanding Hire Purchase Agreement?
You cannot sell a Hire Purchase (HP) car until the finance company pays off the amount. HP requires fixed monthly payments over a specific period before transferring ownership.
You must settle the finance before selling your car, before the agreement ends. Request a settlement figure from your financing provider to pay off the agreement in full. This amount may include remaining payments, fees, and early termination.
Paying the settlement payment by the due date will complete the deal, make the car yours, and let you sell it. Before doing this, it is useful to check finance on car through your provider to confirm the exact balance.
Selling a Car Still Under a Personal Contract Purchase (PCP) Plan
After repaying the finance or paying off the remainder, you can sell a car under Personal Contract Purchase (PCP).
PCP require fixed monthly payments over time. Return the car or pay the final payment to own it at the expiration of the agreement.
Like a Hire Purchase (HP) agreement, check your contract for early settlement fees and voluntary termination terms. Usually, you have two options:
- Settle the finance early: Your lender can provide a settlement price, and once paid in full, you can sell the car. This may be cheaper than monthly payments.
- Return the vehicle: If you voluntarily end the financing agreement, you can give the car back if you have paid back at least 50% of the total amount, including interest and fees. If you do not meet this condition, you can pay the difference and return the vehicle.
Seeking a settlement figure from your finance provider is optional. However, a settlement payment is definitive and irreversible. Miss the settlement date? Request an updated figure.
You can legally sell the car after the lender clears the finance.
How to Sell a Car with a Personal Contract Hire (PCH) Agreement
Personal Contract Hire (PCH) is long-term car leasing for people. This agreement requires an upfront rental (deposit) and fixed monthly payments over two to four years.
PCH does not offer vehicle ownership like PCP or HP. No matter what, the car always belongs to the leasing company.
Return the vehicle after the lease ends. Extra fees may apply if the car has damage beyond fair wear and tear or exceeds the mileage restriction. Early termination of a PCH agreement might be costly.
Occasionally, lease companies may give you the chance to buy the car when your contract is up, but they are not required to do so.
Will a Dealership Handle the Finance When Buying My Car?
Retailers or dealers may sometimes agree to settle the outstanding finance on your account as part of the deal when you buy a car.
Before you go any further, you should check to see if your current finances are in negative equity. To do this, you will need to get a payment amount from your financing company and compare it with how much your car is worth now.
- You are in negative equity if the settlement figure is less than the value of your car. In this case, you might want to stick to the deal you already have until the balance goes down.
- If you decide to move forward, you can start looking for a new car and talk to a lender or broker about refinancing choices. If approved, your new finance deal will include the cost of your new car as well as the amount you pay to settle your old loan.
Part-exchanging your current vehicle when upgrading will reduce the cost of your fresh financing deal by reducing the amount you need to borrow.
