How To Sell a Car With Outstanding Finance
Sometimes, people find themselves in a position where they need to sell their car but they still have finance outstanding on the vehicle. This can present a bit of a problem as most buyers will not be willing to take on someone else’s debt. Also, it is illegal to sell a car if there is money still owed on it. So, what are some options for people in this situation?
If you are looking to sell a car that still has outstanding finance on it, then you may be wondering how this is possible. It’s not as difficult as you may think, but there are a few things that you will need to do to make the sale go through. In this blog post, we will discuss the steps that you need to take to sell a car with the finance still owed to it. We will also provide some tips on how to find a buyer who is willing and able to take on the responsibility of paying off the remaining balance of the loan.
Can I Sell A Car With Outstanding Finance?
Before we start, it’s important to note that it is illegal to sell a car with outstanding finance in the UK. This is because the car is used as security against the loan and, if you sell it, the lender will not be able to reclaim the vehicle. As such, they will pursue legal action against you for the outstanding amount owed. However, in the UK, anyone can terminate their finance agreement for any reason at any time. All you have to do is ask for a settlement figure and your contract will be terminated. The finance firm will then compute what you owe, including any early termination charges if applicable, and provide a deadline by which the payment should be paid. After that, the car will be yours to do as you please.
So, if you’re looking to sell your car but still have finance outstanding on it, the first thing that you need to do is get in touch with your lender and request a settlement figure. Once you have this amount, you can start advertising your car for sale.
If you’re worried about finding a buyer who is willing to take on the responsibility of paying off the remaining balance of the loan, then you can always sell your car through a dealer that offers finance. This way, the dealer will pay off the outstanding amount and you will only need to worry about selling your car for its market value.
You can also try to sell privately to someone who is looking for a car but you have to be straightforward about the situation. Mention that there is still finance outstanding on the car and that they will need to take over the payments. You should also include the settlement figure in your advert so that interested buyers know exactly what they are getting themselves into.
How To Sell A Car With Outstanding Finance?
So now, let’s move on to the next question. What if you still want to sell the car with outstanding finance? The best way to avoid any legal complications or issues with the sale is to pay off the loan in full before you attempt to sell the car. This will give you a clean title and peace of mind knowing that there’s no debt attached to the vehicle. It will also make it much easier to sell, as most buyers will not be interested in taking on an outstanding loan.
As a general rule, it is illegal to sell a car with an outstanding auto loan, so you’ll need to pay the debt first. Most reputable dealers will be able to handle the outstanding finance and pay it off for you as part of the deal if you’re trading in your financed automobile. You can try to sell privately, but you’ll still need to pay off the loan before transferring ownership.
The procedure for handling a car sale with outstanding finance depends on the sort of financing agreement. There are four main types of car finance available in the UK:
PCP or Personal Contract Purchase
One of the most popular methods to acquire a new vehicle is through a personal contract purchase (PCP) agreement. You don’t own the automobile under these finance arrangements, so you can’t sell it until you’ve paid off the outstanding loan.
A PCP finance agreement works like this: You make a deposit first, then pay a monthly sum for a set length of time (usually around two to four years), and then either return the car or pay an agreed final amount, known as a balloon payment or alternative final payment. The automobile is now yours; the loan is paid off, and you can sell it.
If you want to sell the car before the term of your agreement with the finance company, you’ll need a settlement figure from them. This is simple if you’re trading in your current vehicle for a new one because the dealer will handle everything. To sell the automobile privately, you must first request a settlement figure from the finance firm, pay it off, and then sell the car.
HP or Hire Purchase
A hire purchase (HP) is a finance agreement where you pay an initial deposit, followed by monthly payments for the duration of the contract, which is usually between one and three years. The vehicle is yours to drive at the end of the term; however, if you want to sell it before then, you’ll need to pay off the outstanding finance.
As with a PCP agreement, the best way to sell an HP car is by trading it in at a dealership because they will sort out the finance for you. If you’re selling privately, you must first get a settlement figure from your lender and then pay off the loan before selling the car. If you’re part-exchanging your automobile at a dealership, they’ll take care of it for you.
Personal Loan
If you’ve taken out a personal loan to finance your vehicle, the process for selling is straightforward because you own the car outright from the start. You can sell it at any time and don’t need to contact the lender first.
You can sell the used car with a personal loan. Because the agreement is between you and the lender, this is possible. The money isn’t tied to the vehicle’s value. However, if you sell your automobile, you’ll owe the remainder of the loan and must continue to make payments. Of course, you may use the proceeds of the sale to pay off any remaining debt. Once you’ve sold the automobile, simply repay the outstanding amount on your loan, and that’s it.
PCH or Personal Contract Hire
A personal contract hire (PCH) finance agreement is a personal lease in which you rent the car for a specified length of time. Personal contract hire contracts are limited in duration and come to an end when you return the vehicle after the term.
With a personal contract hire (PCH) agreement, you effectively rent the car for an agreed period, usually between two and four years. You don’t own the vehicle at the end of the term, so you can’t sell it because you are under the PCH finance agreement. You can only return it at the end of the term.
If you want to get out of your PCH agreement early, you’ll need to pay a termination fee as specified in your contract. This could be expensive, so it’s best to check before you sign the contract.
Conclusion
In conclusion, even though it’s not suggested as it is illegal, you can still sell your car with outstanding finance under some conditions. The process may be a little more complicated, and you might have to pay some fees, but it is possible. The best way to do this is by trading in your car at a dealership or by getting a settlement figure from your lender and then paying off the loan. If you’re looking to sell your car with outstanding finance, remember that the process is different depending on the type of finance agreement you have. Be sure to check with your lender before selling to avoid any penalties.
On the other side, if you are planning to buy a used car and want to be sure if the car has any finance owing on it, you can run a car check with Regcarcheck.co.uk. We’ll give you a full history of the vehicle, including any finance owing on it. By running an outstanding finance check, you can avoid any problems down the road. So, whether you’re looking to sell or buy a car with outstanding finance, be sure to do your research first.
Frequently Asked Questions
- Can I sell my car if it has outstanding finance?
Yes, it is possible to sell a car with outstanding finance. However, before proceeding with the sale, you need to take certain steps to ensure a smooth transaction and comply with legal requirements. Selling a car with outstanding finance can be more complex than selling a car that is fully owned, but with the right approach, you can successfully navigate this situation.
- What is outstanding finance?
Outstanding finance refers to an unpaid loan or lease agreement that the current owner of the vehicle has entered into. When purchasing a car through financing, the finance company provides the funds for the purchase, and until the loan or lease is fully repaid, the finance company retains legal ownership of the car. This means that you do not have full ownership rights until the outstanding finance is settled.
- What are the options for selling a car with outstanding finance?
There are a few options available to sell a car with outstanding finance. Firstly, you can choose to settle the finance before selling the car. This involves contacting your finance company, obtaining a settlement figure, and paying off the outstanding amount. Once the finance is settled, you will receive the necessary paperwork to transfer full ownership to the buyer. Alternatively, you can also sell the car and use the sale proceeds to settle the outstanding finance.
- How do I settle the outstanding finance on my car?
To settle the outstanding finance on your car, you will need to contact your finance company and obtain a settlement figure. The settlement figure represents the amount required to pay off the loan or lease in full, including any remaining principal balance, interest, and additional fees. Once you have this figure, you can make the necessary arrangements to clear the outstanding finance.
- Can I sell my car if the settlement figure is higher than the car’s value?
Yes, it is possible to sell the car even if the settlement figure is higher than its value. However, in such cases, you will be responsible for covering the shortfall between the sale price and the settlement amount. For example, if the settlement figure is £10,000 and you sell the car for £8,000, you will need to pay the remaining £2,000 to the finance company to clear the outstanding finance.
- How do I check if my car has outstanding finance?
Checking if a car has outstanding finance is essential to avoid any surprises during the selling process. You can perform a car finance check using our online service at RegCarCheck. Simply enter the car’s registration number, and our system will provide you with a comprehensive report that includes information about outstanding finance. This check is vital for both sellers and potential buyers to ensure transparency and avoid any legal issues.
- What happens if I sell a car with outstanding finance without settling it?
Selling a car with outstanding finance without settling it is illegal and can result in serious consequences. The finance company still holds legal ownership of the vehicle, and the new owner may face repossession. Additionally, the original owner can face legal action from the finance company for breaching the terms of the finance agreement. It is essential to clear any remaining finance before transferring ownership to the new buyer.
- Can I transfer the finance agreement to the new owner?
In most cases, finance agreements are non-transferable. This means that the finance agreement you entered into with the finance company cannot be transferred to the new owner of the vehicle. The new owner will need to arrange their own financing if they wish to purchase the vehicle.
- Can I sell a car with outstanding finance privately?
Yes, you can sell a car with outstanding finance privately. However, it is important to inform potential buyers about the finance arrangement and be transparent throughout the process. When advertising the car for sale, clearly state that there is outstanding finance and that it will be settled before the ownership transfer. Ensure that you provide all the necessary documentation and communicate openly with potential buyers to avoid any misunderstandings.
- Should I sell my car to a dealer if it has outstanding finance?
Selling your car to a dealer when it has outstanding finance can be a viable option. Dealers often have experience dealing with cars that have outstanding finance and can handle the settlement process on your behalf. They will assess the car’s value, deduct the outstanding finance amount from the sale price, and handle the necessary paperwork to clear the finance. However, keep in mind that dealers may offer a lower price compared to selling the car privately.
