Selling a Car with Outstanding Finance in the UK: Is it legal?

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Want to sell a car that still has finance remaining? The good news is that it's possible, and legal, but there are a few extra steps involved compared to selling a car that you fully own. Don't worry though, we've got you covered with this helpful guide. Whether you have outstanding Personal Contract Purchase (PCP) or Hire Purchase (HP) finance, our advice will help you to sell your car and close the finance contract smoothly.

Key Highlights:

How to Sell a Financed Car:

  1. Contact your finance provider and inform them about your intention to sell. Since they are still the legal owner, you'll need their permission.
  2. Ask for a settlement figure. If you've already paid off more than half of the original agreement, you can usually return the car and close the contract through voluntary termination.
  3. If you haven't reached the halfway mark, get in touch with your provider. They may allow you to return the vehicle for them to sell, which will be deducted from your remaining amount. However, you'll still need to continue making monthly payments until you've paid off 50%. Remember that the sooner you return the car, the higher its value is likely to be. Just be aware that you'll still be making payments for a car that you no longer have.

Can You Make Money by Selling a Financed Car?

Yes, it's possible. One option is to buy the car outright and then sell it for a higher price than what you paid. This may not always be feasible, but a well-maintained car can sometimes fetch a good amount, especially if it's in high demand.

If buying the car outright is not an option, you can take out a loan to raise the necessary funds. While this allows you to sell the car as the full owner and potentially make a profit, you will be in debt to the loan lender.

If you choose to Sell 2 Swansway we can tell you how much will be needed to settle your finance and how much you'll be left with afterwards.

Is it Possible to Part Exchange a Financed Car?

If you want to replace your financed car with a different one, you can part-exchange it. The process is similar to selling the car:

  1. Inform your finance company about your intention to sell.
  2. Request a settlement figure from them.
  3. Inquire with the company you plan to finance your new car from about the amount they will pay for your part-exchange vehicle.

If their offer exceeds your outstanding finance, you'll have positive equity. This value can be used towards your next car. For example, if your car is valued at £10,000 and the remaining finance is £1,000, you'll have £9,000 to put towards your new vehicle.

If the amount you owe to the finance company is higher than the offer you receive, you'll have negative equity. In this case, you can either separately pay off the remaining amount or ask the new finance company if they can include it in the agreement for your new car.

Selling a car with outstanding finance doesn't have to be complicated. Just follow these steps, and you'll be well on your way to successfully selling your car and resolving the finance contract.

If you choose to sell your car with us, our friendly team will guide you through the process of settling the finance.

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