Can you sell a car on finance?

Are you looking to sell your car but still have outstanding finance? You will be joining many others, with searches for ‘selling a car on finance’ increasing by 53% in recent days. You can legally sell a car on finance, but first, you will need to settle the amount with the finance company if you’re selling privately. However, at Goodbye Car we can settle this for you. Here, we explain this alongside your most asked questions on the topic in this guide.  

Can I sell my car on finance?

Strictly speaking, when a car is on finance, it’s technically not yours, so you don’t have the right to sell it. But, some car dealers can settle this for you. At Goodbye Car we can provide a quote to settle your outstanding finance, making selling a car on finance easy.

This will be based on the settlement amount, the amount borrowed, length of contract agreement, date your finance agreement began, and monthly payment amount.

Please note, this quote is just an estimate and may not be the exact amount of finance you have outstanding. Once you have provided an in-date letter from your finance company that specifies exact outstanding finance details, we will take that figure into consideration on your overall total. If your car is damaged, or has a private plate, we can also provide insight on this. 

How to sell a financed car?

When selling privately, you will have to pay off your outstanding finance first before you’d be able to sell the vehicle. If your car is financed through Hire Purchase (HP) or Personal Contract Purchase (PCP) the lender is still technically the owner until you have paid the finance agreement of the settlement figure. Selling the car privately without informing the buyer of the outstanding finance is illegal and could result in you being sued for fraud.

However, if you sell a financed car to Goodbye Car, this process is a lot simpler. You will need to obtain a settlement letter from your lender. Once you have contacted them, enter your details on our valuation tool. Then, book your in-branch or home appointment once you've received your finance settlement figure back from the lender. You will need that alongside, vehicle documentation - you can see what you need in our documents for selling your car guide.

Our free, no-obligation, instant online vehicle valuation is quick and simple to use. You'll get your car through our quick and easy sales process. We can also help if you are curious about what happens to your insurance when you sell a car.

Can you sell a car on hire purchase?

If your car is on Hire Purchase (HP) the lender will be the owner of the car until the finance is settled/all payments have been made. Once you pay the settlement figure, you will be able to sell the car within a set period of time. You should familiarise yourself with the paperwork and terms and conditions, and attempting to leave the agreement before six months has passed this may impact your credit rating negatively.

Can I sell my car on PCP?

A car on Personal Contract Purchase (PCP) means you can leave the contract early by settling the outstanding finance amount if you’ve paid over half of the full finance amount - including fees and interest - to the lender. However due to the final balloon payment, it is doubtful that you will have paid 50% by halfway through the contract.

If you haven’t paid over half you can still end the contract early by paying the difference, and if you’ve paid a lot more than half you will not receive a refund.

Can I sell my car on a personal loan?

If you have paid the loan in full, then you own the car and you are able to sell it. If the loan hasn’t been paid in full, you can still sell it, but you need to continue the monthly loan repayments.

Can car finance be transferred to another person?

The answer is typically no - but there are exceptions. If you took out car finance on behalf of someone else who was financially unable to obtain credit without letting the lender know, you may be accused of fraud and ‘fronting’ as it is illegal to take out finance for someone else this way.

Some lenders arrange credit possibilities for people with poor credit histories. Parents can act as a guarantor for their children by taking out car finance for them. Those with poor credit histories can add a guarantor who can vouch for them financially to secure a car finance agreement.

An alternative may be to settle the existing debt and take out a new agreement in the other person’s name. It is recommended to let your finance company know of your intentions and ask for help regarding options and starting the process.

Can I swap my car finance to another car?

Although swapping car finance to another car may seem simple enough to do, unfortunately, it’s not possible. Car finance and loans are tailored to your individual needs and vehicle. The car finance agreement factors in the value of the car, alongside the value of the car at different stages throughout the repayment period. As such, any change to this would affect the car finance contract.

What happens if you buy a car with outstanding finance?

Whether the person sold the car with outstanding finance unintentionally, or on purpose, this is illegal for them to do. Despite it being illegal, it appears many Brits have unknowingly bought a car with outstanding finance, with the search term ‘I bought a car with outstanding finance’ amassing 150 searches a month.

Not to mention, there are numerous posts on Reddit with members wondering what their options are after buying a car with remaining finance.

One Reddit member found themselves in this tricky situation, after they bought a car months prior, only to receive a letter from a car finance company notifying them of the huge £1,470 unsettled finance bill. When the Reddit member tried to get in touch with the seller, the seller let them know it had been paid off, before blocking the member on social media.

So, what happens if you find yourself in this situation? Well, luckily you will often have the right to keep the car - this is called ‘good title’.

This is only the case if:

• You didn’t know the car had outstanding finance, and bought it in ‘good faith’
• You’re a private buyer - you don’t buy cars to sell or hire them on

You don’t have to prove the above apply to you, this is the finance company’s job to do so. However, you can still write to the company and provide them with details of the car purchase, such as how much you paid, when you bought it, and a copy of the advert if you have it.

Can I cancel car finance?

You have 14 days to withdraw from any credit agreement, including all forms of car finance, due to the Consumer Credit Act. After the 14 days, you cannot withdraw from the contract.

What happens next?

GoodBye Car can help you assess your options and figure out what is best for you. We can provide a quote to settle your outstanding finance. We can also help sell your car if it has no road tax. GoodBye Car are happy to help with any questions you may have.