Can you sell a car on finance?

Can you sell a car on finance?

Selling a car on finance is possible – but only after you've settled your agreement with your lender.

Circumstances change, needs evolve. Letting go of your current vehicle may have become a practical necessity. But the world of car finance can feel complex, with its own set of rules and considerations.

You're not alone in wanting clarity, and seeking it is important. Knowingly selling a car with outstanding finance is fraud because you're not the legal owner.

Cut through the confusion and understand what's truly possible.

Understanding your finance agreement

Before you consider selling your car, it's essential to understand the type of car finance agreement you have. The most common types are Hire Purchase (HP) and Personal Contract Purchase (PCP).

Hire Purchase (HP): with HP, you pay fixed monthly instalments, and you own the car once the final payment is made.

Personal Contract Purchase (PCP): PCP involves lower monthly payments, but you have the option to pay a lump sum (the 'balloon payment') at the end to own the car.

It's crucial to check your lender's terms and conditions, as they will outline your rights and obligations if you're thinking about ending your agreement early. 

You'll also need to obtain a settlement figure, which is the amount required to pay off the remaining balance. You can usually find this information on your online account or by contacting your finance provider directly.

Can you sell a car on HP finance? 

Legally, you don't own the car until you've made the final payment on an HP agreement. This means you can't sell the car without settling the finance first.

Here's the process:

1. Obtain a settlement figure 📞

Contact your finance company and request the amount needed to pay off the remaining balance.

2. Settle the agreement 💰

Pay the settlement figure to your lender.

3. Sell the car 🚗

Once the finance is settled, you can sell the car privately, via trade-in, or through other means.

If you sell the car for more than the settlement figure, you can keep the difference. However, selling the car with outstanding finance is against the law and can lead to serious legal and financial consequences.

How do I sell a car on finance?

1. Check your finance agreement 

2. Obtain a settlement figure

3. Decide how to sell the car

4. Prepare the car for sale (cleaning, minor repairs, etc.)

5. Advertise the car and negotiate with potential buyers

6. Settle the finance agreement

7. Complete the sale and transfer ownership 

Transparency is crucial. It's best to settle the finance before you list the car for sale, rather than try to do both at the same time and set yourself up for complications.

Selling a car on finance FAQs

What happens if I can't afford the settlement figure?

Contact your finance provider as they'll be able to let you know the options available when it comes to settling your finance agreement.

Can I transfer a finance agreement to a new buyer?

This is rarely allowed. You would almost certainly need to settle the finance in some form before transferring ownership of the vehicle.

Can a car dealer settle my finance for me?

Yes, as long as you get the settlement figure from your finance provider, there's a good chance that a dealership will handle the settlement for you if they're buying the car from you. If the purchase price is lower than the settlement, you'll have to make up the difference. 

Can I sell a car on finance privately?

Yes, but you would have to settle the agreement first. It's highly unlikely that a private buyer would be willing to arrange this, as a dealer might.

What if I buy a car with outstanding finance? 

You may be at risk of having your car seized if it had outstanding finance when you bought it. Some lenders may consider you to have a 'good title' on the car and pursue the money they are owed from whoever sold you the vehicle. But this is entirely at their discretion. Running a car history check before purchasing a used car can help you avoid scams such as these.

Can I get a settlement with First Response Finance?

Of course you can. Contact the Account Management team on 01942 686 686 or via email at customer.services@frfl.co.uk. We'll provide you with the exact amount you need to settle your account and discuss potential options, whether you're looking to sell your car or upgrade to a new one.

First Response Finance – experts in all things car finance

Selling a car on finance can seem daunting, but it's a manageable process when you're armed with the right knowledge.

At First Response Finance, we understand the importance of clear, reliable guidance. We're proud to have been recognised as the Best Car Finance Provider at the Consumer Credit Awards 2024, a testament to our commitment to customer satisfaction. In fact, 98% of our customers would recommend us - a reflection of our exceptional service.

If you're looking to review your current car finance agreement or explore options for renewing your finance, we're here to help. You can find detailed information and support on our 'Managing your finance agreement' and 'Renewing your finance' pages. Don't hesitate to reach out to our team for personalised assistance.