Skip to content

Can I sell a car with outstanding PCP finance?

Victoria Russell
Written by  Victoria Russell
5 min read
Updated: 30 May 2024

Key points

  • Selling a car with outstanding Personal Contract Purchase (PCP) or Hire Purchase (HP) finance requires settling the balance with the finance company or obtaining their permission, as the vehicle is legally owned by the lender until all payments are completed

  • The process of selling a financed car involves contacting the finance provider for a payoff amount, settling the debt, and transferring ownership legally to the buyer

  • Part-exchanging a financed car can simplify acquiring a new vehicle, with dealerships often handling the settlement of outstanding finance and necessary paperwork

Can I sell a car with outstanding PCP finance?

Exploring the possibility of selling a car under Personal Contract Purchase (PCP) finance involves understanding several key aspects.

Firstly, it's crucial to grasp the nature of PCP finance and ownership rights.

Typically, with PCP, the vehicle remains the property of the finance company until all payments are completed.

This arrangement means that the buyer does not own the car during the term of the finance agreement.

Regarding legal restrictions, selling a car that is still under PCP finance without settling the outstanding balance is generally not permissible.

The finance agreement usually includes clauses that prevent the transfer of ownership until the finance is fully repaid.

Therefore, if you're considering selling your PCP financed car, you must first clear the remaining balance with the finance company.

If you decide to proceed with the sale, several steps must be followed to ensure everything is above board.

That means contacting your finance provider to inform them of your intention to sell the vehicle.

They can provide you with the payoff amount and the procedures for clearing your debt.

Once the financial obligations are settled, you can legally transfer ownership to the buyer.

Can I sell a car with outstanding HP finance?

Hire Purchase (HP) 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. Alternatively, obtain consent from the finance company.

Options for sellers include:

  • Paying off the remaining debt in a lump sum

  • Transferring the HP agreement to the buyer

  • Trading the car in with a dealership that can settle the finance

Each choice has legal and financial implications. Therefore, it’s wise to consult with the finance company.

Possibly, consult a legal adviser to ensure compliance and avoid potential pitfalls.

What are the steps for selling a financed car?

  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 necessary 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

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

Advantages of selling a financed car:

  1. Immediate cash flow: Selling a financed car provides immediate cash. This can be crucial in urgent financial situations

  2. Potential to upscale: You can settle the existing finance by selling your vehicle. Any surplus funds may help upgrade to a better model

  3. Interest savings: Selling the car for more than the remaining finance saves on future interest. This happens by settling the debt earlier

Disadvantages of selling a financed car:

  1. Complex process: The sale process is more involved than a standard vehicle transaction. It includes settling the finance agreement with the lender, adding complexity

  2. Potential financial risk: If the car sells for less than the outstanding finance, you might face a shortfall. This could worsen your financial situation

  3. Legal considerations: It is crucial to handle all legalities correctly. This avoids future liabilities related to the finance agreement

Can I part exchange a financed car?

Part-exchanging a financed car involves trading in your current vehicle. This vehicle still has outstanding finance. It is part of the payment for another car.

This process simplifies the transition to a new vehicle. You won't have to settle the existing finance separately.

One of the main advantages of part-exchanging a financed vehicle is streamlining your next car's acquisition.

Dealerships often handle the paperwork. They also settle the outstanding finance on your behalf. This can reduce the hassle and time compared to selling privately.

To ensure a smooth part-exchange process, start by obtaining a settlement figure. This figure comes from your finance company. It tells you how much needs to be paid to clear your current finance.

Next, have your vehicle appraised to determine its trade-in value. If the trade-in offer covers the settlement amount, you can proceed with the exchange. If the offer is lower, you'll need to cover the difference.

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

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.

Compare car finance