Wondering whether you can sell a car on finance? In short, the answer is yes, however, it is more complicated than this.
If you are considering selling a car that is on finance, it is important to understand that this process differs from selling a car which is owned outright. Before selling a car on finance, you need to understand how your current situation and existing car finance arrangement can impact the selling process.
In this article we will break down everything you need to know about selling a car with outstanding finance.
What you need to know about selling a car on finance
Before you even consider selling a car on finance it is important to understand how your current circumstances may impact the process. When we talk about current circumstances we are specifically referring to how legal ownership, opportunities to end your car finance arrangement early, and the value of your car can impact the selling process.
1. Who has ownership of the car
Who has legal ownership of your car has implications for selling a car on finance.
In the majority of car finance arrangements, your V5C logbook will state that you are the registered keeper. However, it is your finance company who is the legal owner of the vehicle. This is because you do not become the legal owner of a car on finance until all repayments have been made and the contract has come to an end.
As you are not the legal owner, it means that you have no legal right to sell your car while it is on finance. If you wish to sell your car on finance, your options are as follows:
- To voluntarily terminate your contract (this is not available for all car financing options).
- Request a settlement figure and pay the outstanding balance.
2. Voluntary termination or settlement
Voluntary termination and paying a settlement figure are two ways which allow you to end a car finance agreement early.
Voluntary termination allows you to end a HP or PCP car finance agreement before you have made the final payment. To be eligible for voluntary termination, you must have financed your car as an individual and have either paid at least 50% of the contract, or be willing to.