Can I sell a car with outstanding PCP finance?
Find out whether you can sell a car that still has outstanding finance – and the legal, financial and practical steps you need to get it right.
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 to 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 still has outstanding finance, there are specific steps to take before you can sell it.
1. Contact your finance provider
Initially, contact the finance company for your car. Inform them of your plan to sell the vehicle. They will provide the current payoff amount. They will also discuss how to clear the outstanding balance.
2. Arrange for settlement of the outstanding finance
After knowing the payoff amount, settle this debt. You may pay it off yourself before the sale. Alternatively, the buyer might pay the finance company directly as part of the purchase.
3. Transfer ownership and handle the paperwork
Once the finance is cleared, transfer the car's ownership. Sign over the vehicle's registration documents to the new owner. Ensure all legal paperwork is completed to record the ownership change.
Will I have to pay an early settlement fee?
When you settle PCP or HP early, your lender will give you a legally defined settlement figure.
This includes the remaining balance minus some future interest, plus any admin or early repayment charges allowed under your agreement.
You are entitled to request this figure at any time, and it is usually valid for 28 days.
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, which means the car is worth less than the amount you still owe on the finance. You would need to make up the shortfall before the sale can be completed
What happens if my car is worth more than the outstanding finance?
If your car is worth more than the amount left on your finance, you are in positive equity. This means that once the finance is settled from the sale, any remaining value belongs to you.
You can use this surplus as cash towards your next car, put it into your bank account, or reduce the cost of a replacement vehicle.
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.
How can I check if a car has outstanding finance?
You can check whether a car has finance by running a vehicle history check using the registration number.
Services such as HPI, RAC or Experian will show if the car is subject to PCP, HP or other finance, whether it has been written off, or if it’s been reported stolen.
This is essential for buyers, as outstanding finance stays with the car, not the seller.
Personal Finance Expert
Our expert says
Selling a car with outstanding finance is entirely possible, but it needs to be handled carefully. In many cases, the finance can be settled as part of the sale, allowing the vehicle to be transferred legally to a new owner. The key risk is not understanding exactly how much you owe, what type of finance agreement you have, and who actually owns the car until it is paid off. Get these details wrong and you could end up out of pocket, or even accused of selling a car you do not yet legally own.
Other useful guides
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.
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Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
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Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
