Can You Sell a Car on Finance in the UK?

Car Owl

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Summary

• Yes, but it's complicated: You need to settle the finance first.
• Settlement figure: The amount needed to clear the debt.
• You might have equity: If the car is worth more than you owe.

Need to sell a car that's still on finance? It's possible, but there are steps you must follow. Here's how it works.

Can You Legally Sell a Car on Finance?

Technically, you don't own a car that's on finance. The finance company does. Selling it without settling the finance is illegal and could be classed as fraud.

However, you can sell the car if you:

1. Get a settlement figure from the finance company
2. Pay off the finance from the sale proceeds
3. Transfer clear ownership to the buyer

Getting a Settlement Figure

Contact your finance provider and ask for a settlement figure. This tells you:

• Exactly how much you owe
• Any early repayment charges
• How long the figure is valid (usually 14-28 days)

The settlement figure is usually less than remaining payments added together because you save on future interest.

Positive vs Negative Equity

Positive Equity

If your car is worth more than the settlement figure:

• Sell the car
• Pay off the finance
• Keep the difference

Negative Equity

If your car is worth less than the settlement figure:

• You need to pay the shortfall yourself
• Or add it to finance on your next car (if part-exchanging)

Check your car's value with our car valuation guide.

Your Options for Selling

1. Sell to a Dealer

• Easiest option
• They handle the finance settlement
• Usually lower price than private sale

2. Part-Exchange

• Dealer settles existing finance
• Any equity goes toward new car
• Negative equity can be rolled into new finance (not ideal)

3. Sell Privately

• Higher sale price
• More complicated with finance
• Buyer pays you, you settle finance immediately

How to Sell Privately with Finance

1. Get settlement figure from finance company
2. Value your car to check for equity
3. Agree sale price with buyer
4. Ask buyer to pay settlement directly to finance company
5. Pay any difference to finance company
6. Receive proof of settlement
7. Complete V5C transfer

Some buyers prefer meeting at the finance company's bank to make the payment directly.

Voluntary Termination

If you've paid at least 50% of the total amount payable, you may have the right to return the car under Voluntary Termination:

• Applies to HP and PCP
• Return the car in good condition
• No more payments required
• Affects your credit file less than defaulting

Read more in our guide to voluntary termination.

What NOT to Do

• Don't sell without telling the finance company: This is illegal
• Don't hide the finance from buyers: They can check
• Don't stop payments: This damages your credit

Buyers can check for outstanding finance with a vehicle history check.

Buying a Car That's on Finance

If you're buying a used car, always check for outstanding finance. If the seller hasn't cleared it, the finance company can repossess the car from you.

For more on finance, see our guides to selling a car on finance and dealing with negative equity.

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