Many buyers look to purchasing a car on finance because it lets you spread the cost over a longer period.
In this case, you'll be the registered keeper of the financed car, but you won’t actually become its owner until everything is paid off. That means you can’t sell the car during your agreement, because it doesn’t belong to you yet.
We all know life can occasionally throw you a curveball, which might see your circumstances change and make it hard to keep up with car finance payments. You won’t be able to sell your financed car, but there might be some options available if you want to look at ending the deal early.
Get a quick, easy, competitive valuation on your current car or find out more about selling your car to Motorpoint.
Can I sell a car on finance?
Technically no, you can’t sell a car that still has outstanding finance. This is because you aren’t the owner of the car, despite being its registered keeper. The finance company that organised your agreement will remain the legal owner of the car until the agreement is fully settled.
But the reality is many car dealers will settle your finance for you if you want to switch to another car. You'll likely face some fees and extra costs as a result, but this is a good option if you suddenly find you need a larger car, or something with a lower monthly payment.
How to sell a financed car
Here's a breakdown of the steps you'll need to take to sell a car with outstanding finance:
- Get in touch with your finance provider and ask for a settlement figure
- Find out how much you'll get from a dealer or car-buying service for your financed car
- Complete the sale once you've got a price you're happy with
- Use the money from that sale to pay off the settlement figure
- Any positive can then be rolled into your next finance agreement
- Any negative equity can be separately paid off or rolled into the next agreement
What is a settlement figure?
If you’re in a situation where you’d like to sell your financed car, many finance companies will be able to provide you with a settlement figure. This will tell you how much you’ll need to pay to cover all the remaining finance plus any additional outstanding fees, at which point the car will be yours to sell on.
If the maths works out in your favour, you’ll get more back from the sale of the car than you spent settling the finance. However, it’s possible that you might get back less from the sale of your car than the settlement figure, leaving you out of pocket.
The exact details change depending on whether you took out personal contract purchase (PCP) or hire purchase (HP) finance. Keep reading to learn more about your options for ending these two common types of car finance.
Can you sell a car financed on PCP?
PCP finance sees you pay for a portion of a car’s value over the course of the finance deal. Then, once the deal comes to an end, you can either hand the car back and walk away, trade for another car from the same dealer or pay the optional final balloon payment and own the car outright.
You won’t own your PCP-financed car until you’ve paid off all the finance and fees, and also paid the final balloon payment. If you choose not to pay the final balloon and hand the car back, then you won’t ever own it and won’t have the option to sell it.
If you want to sell your PCP-financed car, you’ll need to request a settlement figure from your finance provider. This figure will include all remaining finance and fees from the agreement, plus the optional final balloon payment and any penalty payments that might be applied for early repayment.
Once you’ve paid the settlement figure to the finance company, you will be the legal owner of the car and are free to sell it on. You can use any money you make in the sale of the vehicle to cover the costs you incurred from settling the finance. It’s worth very carefully weighing up how much you believe you can get from the sale of the vehicle against the price of the settlement figure.
Can you sell a car financed on HP?
Again, the very short answer is no. You won’t own your car until the HP finance agreement is settled, so you won’t have the right to sell it while the agreement is still being paid off. With HP finance, once you’ve completed the agreement, the car is yours with no further balloon payment to make, allowing you to immediately sell it if you choose to.
If you’ve paid 50% or more of the total HP agreement, you have the option to return the car to the finance company. If not, you’ll have to pay a settlement to bring yourself up to the 50% point if you’ve not yet reached it. This option means you won’t be able to sell the car at any point, but it will close the finance agreement if you’re struggling to meet the monthly repayments.
Can I end a finance deal early?
We’d strongly suggest trying to keep up with the payments for your car finance if this is possible, because you’ll likely end up paying more in the long run if you seek to modify the deal’s terms part-way through.
However, if you need to end a finance deal early, you can ask for the full settlement figure, which includes all the remaining finance, fees, charges and the final balloon payment if it's a PCP deal. Once you’ve paid this, the finance deal will be over and the car is yours to do whatever you want with.
Is there a more simple way to sell a financed car?
Settling a finance agreement yourself so you can then sell the car can be a bit of a hassle. There is usually a more straightforward option available, however.
Your finance provider, along with most car retailers and dealerships, will be able to discuss your finance options with you. This can include arranging a settlement on your existing financed vehicle, and building the price of that settlement into a new finance agreement – potentially on a more affordable car if you’re struggling to keep up with your current payments.
At Motorpoint, we’re able to look at your existing finance package, even if it’s not with us, and establish your settlement figure. We can then settle your outstanding finance and roll that cost into a new finance package. This can be for a more affordable car, helping you stay on the road while cutting your costs.
Can I sell a car I bought with a bank loan?
If you got a personal loan to purchase your car, then you’re free to sell it at any point. This is because you bought the car outright with the money from the loan. You will, of course, have to continue repaying the loan until it’s settled, but you’re free to sell the car at any time after buying it.
In most cases, you can get a settlement figure for the loan you took out from the provider if you want to close the agreement early. If you sell your car, this sum might be enough to cover the settlement figure, but keep an eye out for any early repayment charges you might face for paying off the loan before the end of the agreement.
Can I sell a car financed on PCH (leasing)?
No. If you decide to lease a car – usually called Personal Contract Hire (PCH) – you can't sell it. This is because you're essentially renting the car over a long period of time without the option to buy it. As a result, you'll never be the car's owner and will be unable to transfer that ownership onto someone else.
PCH leasing deals are built so you use the car as if it were your own during the agreement period, and then hand it back to the company with the option to start a new leasing agreement at that point. Your leasing provider might be willing to sell you the car after your lease agreement but you'd need to discuss that beforehand – if you do successfully buy the car from the leasing provider, you're then able to sell it whenever you want.
Learn more about car finance
Read our car finance options guide to learn more. If you’re looking for ways to keep your costs down, take a look at our picks for the best fuel-efficient cars. If you want to reduce your monthly outgoings, read our explainer for cutting your car repayments. Or, if you fancy a fresh car without the up-front cost, find out how you might be able to get no-deposit car finance.
