People wanting to sell their car, to either make a little money or shop around for something new, is not at all unusual. It’s also not uncommon for people with outstanding car finance to want to sell up or change cars.
The potential difficulty you may have in selling a car with outstanding finance can, in part, depend on the type of car finance deal you have.
- Can I sell a car with an outstanding hire purchase agreement?
- Can I sell a car with an outstanding personal contract purchase agreement?
- Can I sell my car with an outstanding personal loan agreement?
- Can I sell my car with an outstanding personal contract hire agreement?
- Can I part exchange my car if it has outstanding finance?
- How to sell your car with outstanding finance
Can I sell a car with an outstanding hire purchase agreement
The short answer is no, you cannot sell your car with an outstanding hire purchase agreement.
While you own your car outright at the end of a hire purchase agreement, the lender is the legal owner of the car during the the term that the agreement is in place. This means that if you wanted to sell the car before all the monthly payments have been made you’d have to end the hire purchase agreement early.
If you have repaid less than half of the value of the car then you can return the car. To do this you’ll have to pay the remaining instalments to bring up your payments to half of the car’s value.
However, if you’ve paid over half of the value of the car you’ll not be able to return it to your dealer. This means you’ll have to keep on paying the instalments until the car is yours.
Remember, the costs will include the total of additional interest and fees, which means that half the value will be a little more than half of what you borrowed.
If you can afford to do so, you could consider paying the outstanding amount in one go and leaving your deal early. This would allow you to sell the car as you see fit as it would then be yours.
Do keep in mind that if you do choose to leave the agreement early you may have to pay an early exit fee. This will vary depending on the lender and you should check your contract. Paying off early may mean you avoid paying the interest.
Check to see whether your contract has a ‘voluntary termination’ clause. This would mean that you can return the car without paying any extra costs as long as you’ve paid over half of the value of the car. So keep an eye on your contract.
Can I sell a car with an outstanding personal contract purchase agreement?
No, you can’t sell a car under an outstanding personal contract purchase agreement. As with a hire purchase agreement, the car won’t be yours until after the contract has ended, and in this case you’d also have to have paid the balloon payment to own the car outright.
You can however return the car if you have paid off half of the contract agreement. If you haven’t paid off half of the value of the car yet you would just pay the remaining amount on half of the value of the car. This would allow you to return your car to the dealer.
Alternatively you could pay up the rest of the agreement, along with the balloon payment so that you own the car outright sooner. It would be worth working out the overall cost of interest against the cost of paying up early. Once you’ve done this however you’d be able to sell your car as it would be yours.
Can I sell my car with an outstanding personal loan agreement?
Yes, you can sell your car if you used a personal loan to purchase it. As long as the loan was used to pay for the full value of the car upfront you can sell your car as you wish as the car is yours outright from the start of the agreement.
However, you are still liable for the original loan payments and you will have to continue paying these monthly instalments until they are finished.
Can I sell my car with an outstanding personal contract hire agreement?
No, you cannot sell a car with a PCH as you are not the legal owner of the car. At no point during the term, even at the end, will you have the option of owning it as you're leasing the car.
Some lenders may allow you to terminate your contract early, but this may incur large fees. The positives of this contract is however that because you return the car at the end of the agreement anyway, there’s no need to worry about selling it on and you can get a different car easily.
Can I part exchange my car if it has outstanding finance?
The same limitations apply as with selling your car while it has outstanding finance. You’ll have to make a deal with your lender before you can go about part exchanging it and, depending on your type of finance, this could cost you a considerable amount.
How to sell your car with outstanding finance
Follow the following steps if you want to sell your car while it has outstanding finance:
- Step one - get in touch with your lender: Ask them for advice, inform them of your
intention to sell and ask for a quote on a settlement figure. Make sure you get this in
writing, either by email or a letter.
- Step two - check your contract: Double check your original contract. Look out for
an exit fee, termination date and any other clauses that could affect ending your
- Step three - work out the overall cost and budget: Based on the quote from the
lender and the terms if your contract you need to work out whether exiting early will
cost you more than is left to pay.
- Step four - get your car valued: You should get your car valued. Then you can work out whether selling your car will cover the amount you’d have to pay to leave your contract early, or whether it wouldn’t be enough to cover your settlement fee.
Make sure that you can afford to pay any settlement fee that the lender requires before you agree to it. Also make sure you stay on top of the market value of your car, in case there are any fluctuations.