Selling a Car With Outstanding Finance

Everything you need to know about what to do with your car if you want to sell it.

It can be difficult to know what you can and can't do with your car, especially if you have bought it on finance.

When you buy a car on finance, you essentially enter a contract with the lender for an agreed period of time - typically 24-60 months - in which you make your repayments.

There are several different ways to purchase a car on finance, which can also impact what your options are with your car if or when you wish to sell it.

Do you know your car's equity position? Find out today by signing up to Car Credible for a full car finance appraisal.

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Oftentimes when a person buys a car on finance, they keep making the repayments until they have completed them or taken up their early settlement offer

However, there are occasions when they've changed their mind about their car finance deal or have entered some financial difficulty whereby they need to cut costs to stay afloat.

Here we will take you through the different types of car finance and the options you have if you decide you wish to sell your car.

Hire purchase (HP)

It's not possible to sell your car with outstanding finance on an HP as the finance company is the owner of the car until you have made all of the repayments. 

You would have to apply for your early settlement figure and pay that off before ending the agreement early.

If less than half of the deal has been paid off, then you may be able to return the car but only after you've repaid enough to have paid off half of the car's value.


If on the other hand, you have already repaid more than half of the amount that the car is worth, then you will be unable to return it.

Your contract may give you the ability to 'voluntarily terminate' your agreement. This is on the basis that your payments are up to date, you have paid one-half of the total amount payable in terms of the agreement, and have taken reasonable care of the car.

Personal Contract Purchase (PCP)

Like an HP, it's not possible to sell your car on a PCP until you've made all of the repayments or settlement figure.

If you did want to end your deal early for whatever reason, then you have two options available.

If you have paid off half of the finance, then you are entitled to return it. If you haven't paid off half, then you'd need to cough up the difference in order to settle it.

Your other option is to pay the balloon payment which is the lump sum of money that may be due at the end of your finance deal that must be paid if you wanted to own the car.

Only once you have paid half of the total amount payable or paid the balloon, will you be allowed to sell the car yourself.

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Personal loan

Unlike the previous two options, if you take out a personal loan, you will be able to sell the car as you already have ownership of it.

The personal loan you took out is what you repay to the lender, not the price of the car and therefore the car is yours.

You will of course still have to repay the loan over time, but what you do with the car is completely up to you.


Can a car dealer sell a car that has outstanding finance on it?

A car cannot be sold if it has outstanding credit on it by anyone and would be illegal for a dealer to do. If anyone want to sell a car with outstanding finance, they need to contact the lender and pay off the early settlement figure before they are able to sell it.

Does selling a financed car harm your credit score?

If you have a car on finance and you're concerned about not being able to make future payments, you could settle your car finance deal early, provided you are in a positive equity position and you don't have to make up the difference with your own money. Doing this could avoid you missing payments, keeping your credit history in good condition.