Can you sell a car on finance?
Considering selling your financed car and don’t know if it is possible? Well it is!
At CarMoney we offer a library of guides and blogs tackling all things car finance, including selling a car on finance. This specific guide will walk you through the process smoothly, making it a breeze to sell your financed vehicle.
How to sell a car on finance – What are the first steps?
Following these steps will help you sell your financed car in the UK without any problems.
Contact the finance company – To sell a car on finance requires their involvement as they still legally own it until the finance agreement is settled. Inform them about your intention to sell and ask for a settlement figure. This figure includes the total amount needed to pay off the remaining loan balance and any fees related to early termination, if applicable.
Settlement costs – The settlement amount will cover your remaining loan balance, as well as potential extra costs like:
- Prepayment penalty: Certain lenders impose a fee for terminating the contract ahead of schedule.
- Administrative charges: You may incur fees for handling the settlement process.
It is important to review your finance agreement documents to find all information on any fees you may occur.
Haven’t reached the halfway mark on your loan yet? Talk to your lender. They might allow you to voluntarily surrender the car. They’ll sell it and credit the proceeds towards your loan balance. However, you’ll still be responsible for monthly payments until you reach 50% of the total loan amount. While surrendering the car earlier might fetch a better price, you’ll be making payments for a vehicle you can’t use.
What are my selling options?
There are a few options on how to sell a car on finance such as:
– Private Sale: You must settle the finance amount before selling. This means using your own funds or the sale proceeds to pay off the loan in full. Ensure the buyer knows the car is on finance upfront.
– Dealer Sale: Many dealerships handle financed car sales. They’ll pay off the settlement figure directly to your lender and give you the remaining balance (if any) after the sale.
Things to consider:
- Private sale: You could get more money for your car, but you’ll need to handle the settlement process with your lender directly.
- Dealerships: Faster and easier, but they might offer less because they’ll take care of settling the finances for you.
Value matters: Compare your car’s value to the settlement figure. If your car sells for less than what you owe, you could end up with “negative equity” and still owe money after the sale.
Looking for more information on car finance? Check out our comprehensive guide that covers it all!
Our top most asked questions on selling a car on finance | FAQs
Q. How can I get a settlement figure for my car?
With finance companies, you can usually create an account with them and request this information in their portal. You can alternatively email them or phone them and request this from them.
Q. How long do settlement figures last for?
Your settlement quote will tell you how long you have it; however, they are usually valid for 28 days.
Q. Will your credit rating be affected if you voluntarily terminate your car finance?
Generally, it won’t negatively impact your credit rating. However, it will be noted on your credit report. If you have an early termination fee and do not make this payment, that could negatively impact your credit score.
