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Selling a Car on Finance

10 April 2023
Have car finance and want to sell your car? Finding out if you can leave your finance agreement early and whether selling a car on finance will affect your credit rating can be confusing.

The IsYourCarAvailable team is here to give you all the information you need on how to sell a car with outstanding finance. We look at how you can obtain a settlement figure and in what circumstances you will owe money to the finance company.

Keep reading if you want to sell a financed car. 


Can you sell a car that is on finance? 

If you want to sell a car on finance, the first step is to contact your finance company and ask for a settlement figure. This figure outlines everything you need to leave the agreement early. It will also show any extra charges owed.

Top Tip
Once you have the agreement figure from your finance provider, you will have a set period to pay the total cost. Once this has been paid, you will be the legal owner. If you do not pay the figure during this time, you will need to obtain a new settlement figure before attempting to pay it off.
If you pay the remaining amount outlined in the settlement figure, you will own the car outright. Only when you own the vehicle can you sell the car privately or to a car dealer.

What happens if I sell a car on finance?

A car on finance belongs to the finance company, so if you sold your car before the set period, ends you could face legal action. It is strongly advised you do not sell a car with outstanding finance. For clear advice on what you can and can’t do, we recommend speaking to your finance company directly or seek legal advice. 

Did you know when we buy your car, we will also settle your finance agreement? With no admin fees and the best price guaranteed, we can give you an instant online valuation without fuss.

How do you sell a car that still has finance? 

If your current car is a financed car, this could be a personal contract purchase (PCP) or hire purchase (HP) agreement. You cannot sell the car until you have settled the finance agreement.

Options to sell a car on finance:

  1. Contact the finance company to get a settlement figure. In most cases, you can do this at any point of the finance term. 
  2. For a PCP agreement, this will be made up of any remaining payments, interest and the final balloon payment. You will have a balloon payment if you have negative equity on your old car. The same rules apply to a hire purchase agreement. More on this later on. If you have the funds available, you can pay this immediately. Other options are to take out a personal loan to settle the finance agreement. If you intend to get a new vehicle, if approved, the new finance deal can include the settlement figure from your used car. 
  3. You can return the car if all the payments to date equate to more than half of the loan amount. An early exit fee is often applied in this situation.
  4. Sell the car to IsYourCarAvailable, and we will settle any outstanding finance you have. We compare our prices with industry-standard guidelines to ensure you get the best deal. 


For more on negative equity, explore our article on what you need to part exchange your car.

How easy is it to sell a car on finance?

If you have car finance, it is easy to sell your car to us. All we need is a final settlement figure from your finance company. We will pay any outstanding finance so you have the funds available for a new vehicle.

If you intend to sell the car privately, you need to settle outstanding finance first. Failure to do so could get you in trouble with the law.


Can you legally sell a car on finance?

You cannot legally sell a car with outstanding finance as the car is under an existing leasing agreement and in the eyes of the law, belongs to the finance company, not you. 

You are not the legal owner until the outstanding finance has been paid off. If you want to sell the car, settle the finance agreement to end the deal. To do this, you will need the final settlement figure from the finance company. 

It is not legal to sell a car, and then pay off the finance. At the time of the sale, the car was legally owned by the finance company, not you. 


Can you sell a car with a hire purchase agreement?

The same rule applies to a hire purchase (HP) agreement. The finance company is the car's legal owner, so to sell your car with outstanding hire purchase is illegal. 

Top Tip:

The vehicle’s total cost is made up of accumulated interest and any additional payments. These payments could be an early exit fee and any additional fees that will have been put in place when you took out the finance agreement. 

An early exit fee is usually the cheapest of:

- 1% of the outstanding amount

- 0.5% of the outstanding amount if there is less than a year to be repaid

If the amount to pay is £8,000 or less, there are no charges, the interest is paid instead. 

Your HP agreement may have a voluntary termination clause. Voluntary termination means if you have paid back more than half of the total cost, you can hand the car back without being charged a lump sum. This should not affect your credit rating.

Voluntary termination can be applied to cars on personal contract purchase and hire purchase agreements. This is a good option if you’re struggling to keep up the monthly payments or if your situation has changed and the car no longer suits your needs. 

Can you give the car back on hire purchase?

HP agreements can be cancelled, and the car returned at any time, but as part of the initial monthly payment agreement, you’ll have outstanding HP finance to settle first.

If at any point you feel the finance company has not kept you up to date with payment information, contact the financial ombudsman.

Can a dealer buy a car with outstanding finance?

You can get rid of a car with outstanding finance by selling the car to a dealer. IsYourCarAvailable can settle your outstanding PCP or HP finance when we buy your car.

Can I sell my car to a finance company?

You cannot sell your car to a finance company, but finance agreements state you can return the car provided you have paid more than half the remaining value on the agreement. If less than 50% of the value has been paid, you won't be able to return the car. Remaining instalments or a one-off payment will be needed to bring you up to 50% of the loan amount before the financed car is taken back.

Can I trade in a car with outstanding finance? 

Part-exchanging a car with outstanding finance is possible, often the dealer will pay off the remaining balance using the car’s part exchange value. 

Establishing what you need to do to part exchange your vehicle is a good place to start.

Can I exchange my car on finance for another car?

Unfortunately not. All deals are unique. You will need to negotiate a new finance deal to get another vehicle on finance.

If you’re the owner of a car with outstanding finance and looking to sell your car, we hope this article has been helpful to you. Whether you have a PCP agreement or a HP agreement, knowing where you stand when selling your car is important. Often a change in circumstances triggers the need to investigate whether you can sell your car, so being aware of an optional final payment and your rights is a good place to start.