To start the process, you’ll need to request a settlement figure from the lender. You can ask for this at any time and it’ll be the amount you need to pay to end the loan and become the car’s legal owner. An early repayment charge might apply, so double-check your agreement to know exactly where you stand.
Once you’ve settled, the car will officially be all yours.
Can I sell a car with outstanding HP finance?
With an HP car finance deal, you won’t legally own the car until you’ve made all the loan repayments and paid the Option to Purchase admin fee.
While you’re repaying, you’ll be its registered keeper and responsible for all its running costs, but you can’t sell, modify, or part exchange it.
You can end the loan early by paying the settlement figure, which’ll be the amount you still owe minus any future interest. You could pay it off in full with your savings or take out another type of finance like a personal loan to cover the cost.
Can I sell a car with outstanding PCP finance?
Just like HP, you won’t be the car’s legal owner during your PCP loan term so you can’t sell the car. In fact, you might not ever be its owner if you choose to return it when the loan ends instead.
To end your loan early, you’ll need to pay the settlement figure, which’ll be your outstanding loan balance plus the balloon payment.
Can I sell a car with an outstanding personal loan?
Personal loans work differently from other types of car finance as they won’t usually be secured against the car. That means you’ll become its legal owner as soon as you use the loan to pay the seller.
Keep making your payments on time and you can do whatever you like with the car – sell it, give it away, or modify it however you like!
Can I part exchange a car with outstanding finance?
It can be possible to part exchange a car with outstanding finance, no matter whether you’re hoping to sell your car privately or trade it in at a dealership, the loan must be settled first.
Some dealers might be happy to handle the settlement process for you when you’re buying your next car, but it will often depend on whether you’re in positive or negative equity.
If you’re in positive equity, your car will be worth more than the settlement figure. The dealer might offer to pay off the outstanding finance and put any remaining equity towards your part exchange.
In contrast, if you’re in negative equity, your car will be worth less than the settlement figure, and the dealer might not agree to a part exchange unless you can afford to pay the difference.
Is it illegal to sell a car with outstanding finance?
You can’t legally sell a car that’s owned by someone else. During your HP or PCP loan, you’ll be the car’s registered keeper, but the lender will remain its legal owner. This offers some protection for them if you were to fall behind with your repayments.
What happens if I sell a car with outstanding finance?
It’s against the law to knowingly sell a car with outstanding finance, especially if you don’t inform the buyer. You must settle the finance and become the car’s legal owner first.
If you’re found to have sold a car that’s not legally yours, you could face legal action. The lender may also require that you pay back what you owe.
What are my rights if I’ve bought a car with outstanding finance?
As a used car buyer, there are steps you can take to protect yourself from buying a car with outstanding finance. This might be especially important if you’re buying from a private seller, who often can’t offer the same assurances as an approved dealership.
Several online services let you check whether a car is financed before you take the plunge and hand over your cash. Unfortunately, there’s usually a fee attached, but it might be worth it for the added peace of mind. Depending on the site you use, it could also tell you whether the car’s ever been written off before.
If you do unknowingly buy a car with finance owing, you might be allowed to keep it if you bought it in good faith. Typically, the lender will investigate to decide who should pay the outstanding amount. Even so, there’s a chance that they could decide you’re liable, and if you do find yourself in that situation, consider seeking legal advice.