Can you sell a car on finance?
Absolutely! Selling a car on HP or PCP finance is totally doable. If you still owe money on the car, we can help you settle it, whether you're trading it in or selling it outright. Just grab a copy of your settlement letter and head down to our showroom in Orpington.
What happens when you sell your car on finance?
Remember, the finance company owns the car until you've paid it off completely. So, technically, you can't sell it. But most car dealers can help you settle the finance and get out of your contract. This means you're free to sell your car.
How does it work?
Get a Settlement Figure: Ask the finance company for the exact amount you owe, including any fees.
Sell Your Car: Find a buyer or trade it in at a dealership.
Settle the Finance: The money from the sale will be used to pay off your loan. If you owe more than the car is worth, you'll need to cover the difference. If the car is worth more, you'll have some money left over
Need to get your car valued? Try our no-obligation valuation tool for Part Exchanges, or outright sale.
Selling a Car with HP or PCP Finance
The lender is the legal owner of a car bought on Hire Purchase until all payments have been made. In order to sell the car, you will need to end the agreement early by getting a settlement quote. To get a settlement figure, you will need to contact the finance company asking for one. You should receive a settlement figure within a few working days from the finance company, and will then have a set period to pay the amount stated. Once this figure has been paid, the vehicle can be sold.
If you have paid less than half of the total amount owed on your agreement, you could return the car to the finance company by paying the remaining instalments needed to bring yourself up to half of the remaining value; this includes any interest and fees. This is due to Section 99 of the Consumer Credit Act 1974 known as ‘voluntary termination’. You can read more about this in our guide on cancelling your car finance early.
You can sell a car on PCP finance if you have repaid all repayments or the settlement figure, this includes the final balloon payment, plus any additional fees. If you want to sell the car midway through your PCP agreement you will need to pay off the agreement early, which may be worth doing if the settlement figure is lower than the value of the car. Once the settlement figure has been paid, you will become the legal owner of the car, allowing you to sell the car to privately, or to a dealership like us.
Similarly to HP agreements, there will be a clause in your contract known as ‘voluntary termination’ that will allow you to return the car to the finance company if you have paid half of the total repayments. However, voluntary termination often results in you handing back the car rather than potentially cashing in on any positive equity in the vehicle. Taking ownership of the vehicle is at the discretion of the finance company, if you are provided with a settlement letter confirming the amount to clear the interest in the vehicle, and the original V5, we will be able to purchase the vehicle from you.
Selling a car bought with a Personal Loan
If you used a personal loan, you own the car. So, you can sell it whenever you want, but you'll still need to keep making your loan payments for the duration of the loan term.
Trading in your car (Part Exchange)
You can trade in a car with outstanding finance. The dealership will usually offer you a Part Exchange price and then use that to pay off your loan. If the car is worth more than you owe, you'll get the difference. If it's worth less, you'll need to pay the difference.
Remember: Selling a car privately without telling the buyer about outstanding finance is illegal. Be honest and upfront about the situation.