Can I sell a car with outstanding PCP finance?

Key points

• You can sell your car with outstanding finance but you'll need to settle the debt first and transfer ownership to the new buyer

• It's illegal to sell a car with outstanding finance to a private buyer without making them aware of the car's status

• If you're part-exchanging a financed car or selling it to a third party car buying service, the dealership can often help with the admin involved in settle the outstanding finance

Can I sell a car with outstanding PCP finance?

Yes, you can sell a car with outstanding Personal Contract Purchase (PCP) finance, but you'll need to settle your finance agreement first.

Typically, with PCP, the vehicle remains the property of the finance company until all payments are completed. This arrangement means that as a buyer, you don't own the car during the term of the finance contract.

Your finance agreement usually includes a clause that prevents the transfer of ownership until the finance is fully repaid. As a result, you'll find that it's not acceptable to sell your vehicle or transfer ownership while it's still under a PCP agreement until the outstanding balance is settled.

Can I sell a car with outstanding HP finance?

You can sell your vehicle on a Hire Purchase (HP) contract but similar to a PCP agreement, you'll have to settle your finance first. This type of finance means you're paying off your car in instalments. The lender owns the car until you've paid the final instalment.

This ownership setup complicates selling the vehicle while it's still under finance. Legally, you cannot sell the car without the lender’s permission. This is because it’s not yet yours to sell.

If you're considering selling a car with outstanding HP finance, you must first settle the remaining balance.

What are the steps for selling a financed car?

If your car has outstanding finance, you'll need to follow the following steps to sell it:

What are the pros and cons of selling a car on finance?

As with any financial agreement, there are pros and cons to selling a financed car:

Pros

• You could save money on any remaining finance and interest

• The option to sell privately or to a dealership

• You might be able to reduce your monthly payment on a different car

Cons

• You might have to pay the lender early repayment fees to leave the finance contract

• If you're selling it privately, you'll have to deal with the paperwork yourself

• You may be left in negative equity

Can I part exchange a financed car?

Yes, you can part exchange a car that is still on finance. If you're looking to trade your financed car in for another car sold by a dealership, they will typically handle the paperwork for you and settle the outstanding balance on your behalf.

If the trade-in offer covers the settlement amount, you can proceed with the exchange. However, if the offer is lower, you'll need to cover the difference.

Selling your finance car to a car buying service follows a similar process and the company will help you settle your financial agreement when they purchase your car.

Always ensure the dealership provides a clear breakdown of figures and that all agreements are documented to avoid misunderstandings.

Can I transfer my car finance to another person?

No, you cannot transfer your car finance agreement to another person. Each agreement is specific to the individual approved for the loan, due to unique credit histories and financial assessments. If you want to sell your car, you'll need to settle your finance first. You can request this from your lender at any time.

Is it illegal to sell a car with outstanding finance?

Yes, it is illegal to sell a car with outstanding finance to a private buyer without informing them of the car's financial status. To sell the car legally, you must first settle any outstanding finance.

In both PCP and HP arrangements, you are the registered keeper on the car’s V5C logbook, however, the finance company is the legal owner. This means you can't legally sell the car without paying for it and becoming the legal owner.

Compare MoneySuperMarket car finance deals

You can compare car finance deals with our partner Motiv. It’s an online service that allows you to see if you’re eligible for HP and PCP deals and the rates you’ll pay.

It only takes a few minutes to enter your details and compare offers. Better still, it's free and searching for a deal won’t harm your credit score.