Sell your car on finance
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Sell my car on finance
Selling a car on finance is becoming more popular every year. Over 85% of cars bought in the UK are purchased using some kind of finance arrangement, be it PCP finance, HP or other lease agreement. The question is, can you sell a car that’s on finance? The short answer is ‘yes’ and it’s simple to do so. However, it’s worth understanding the process to ensure you get the best possible outcome for your bank balance.
When you buy a car on finance, even though your name is on the paperwork, you technically do not actually own the car. The car is actually owned by the lender until the point you have completed all of the agreed payments. However, you can opt for what is known as a ‘voluntary termination’, this allows you to end a finance agreement as long as you have paid 50% in full and have met certain other requirements (this varies depending on the lender). This allows you to sell the car.
The important thing to remember when selling a car on finance, is that you’ll need to make sure you are able to repay the outstanding amount (also known as a settlement figure). If the value of your car doesn’t cover the settlement figure, you’ll need to use your own finances to cover the shortfall. Once you have this figure to hand, you are free to talk to potential buyers, armed with a figure to aim for to clear your finance and pocket the rest. You can also trade in your car on finance to purchase another car. Many car dealers will offer to help clear your finance if you are looking to buy from them. Be wary though, as many will charge an admin fee for this service.
How do I sell my financed car?
Once you have decided that you want to sell your car on finance, the first step will be to get your settlement figure from your finance company. The settlement figure is the amount you are required to pay back in order for your buyer to own the car outright. Once you have this settlement figure to hand, you’ll know the figure to aim for when selling your car. It’s important to note that you cannot legally sell on the car without having first paid off the settlement agreement. This is because the finance company is still the legal owner of the car. Most car buying companies and car dealers will clear any outstanding finance for you before buying your vehicle and will even act on your behalf to transfer the funds.
All buyers on Motorway buy cars on finance every day – this could be a dealer or an online car buyer and the process is the same every time. The finance-clearing process is simple and your chosen buyer will guide you through the steps. If your car is eligible to be sold with Motorway’s Premium Service, one of our sales agents can explain the process of selling a car on finance over the phone, and can answer any questions you may have before the sale is complete.
The process starts with getting a settlement figure and official statement in writing from your finance company. With this document, the buyer can pay your finance off directly before they collect your car. It may take one or two business days to clear funds with your finance company before the sale is complete. The settlement process is explained further in the next section.
How to settle your car’s finance
Before you sell a car with outstanding finance you will need to settle any remaining money owed with your finance company. If you are keen to sell your car before your finance agreement ends, you can opt for a ‘voluntary termination’. This will allow you to give the car back to the finance company and not make any additional payments. However, you can only voluntarily terminate if you have paid off at least 50% of the total cost including all interest and fees.
If you choose this route you won’t usually have to pay the interest, but you will have to pay an early exit fee. This is typically either 1% of the outstanding amount or 0.5% in cases where there are less than 12 months to be repaid. The process is the same whether you are on PCP, HP or other car finance agreement. If you paid for your car using a personal loan from your bank, then the car is yours already and you are free to do whatever you like with it – including selling it!
The final option for settling car finance is to have it done by a third party. Many car dealers, instant car buyers and other professional purchasers will be familiar with the process of buying cars with outstanding finance, and they will be able to facilitate the process for you. All you need to provide is written confirmation (from your finance company) of the settlement figure. Once you have agreed on a price for the car, the buyer will then contact your finance company and pay them directly. If the car is worth less than the settlement figure, you will need to cover the shortfall.
Tips for selling a car on finance
There are many things to consider before you rush to sell a car you own that’s on finance. Firstly, consider if you would like to buy another vehicle. If you are considering purchasing a new car then it may be worth handing the car back to the finance lender and opening an agreement for a new car with the same lender. This could save you lots of time with paperwork, and potentially money if they can offer you bespoke rates, as you’ll already be known to your current lender. Remember, you’ll need to have paid at least 50% of your agreement off to do this as a voluntary termination. It may also be worth checking to see if you can find better rates on the market from another finance company.
If you are looking to sell your car because you are struggling to make the monthly payments, you should always talk to your lender before doing anything. Just inform them of your situation and why things may have changed. Most lenders are experienced with customers facing financial issues and may be able to help organise an alternative payment schedule that is easier to manage.
If you work out that selling is right for you, make sure you are in receipt of the written settlement figure from your lender. You can get this simply by calling your finance lender and asking them for it if you don’t have it. They should be able to email it over or you can receive it by post.
When selling a car on finance, make sure you have all the relevant documents required to sell to a buyer on hand, this includes the following:
- V5C logbook – for proof of ownership
- Service history – a full service history will lead to better offers for your car
- MOT certificate (if your car is over three years old) – the buyer may ask to see your most-recent MOT document
Finally, in order to ensure you get the best possible price for your car, you will need to prepare your vehicle and make sure it is clean and tidy. Don’t give a potential buyer an excuse to knock you down on price. Finally, make sure you have any spare keys ready to handover, and do any minor repairs before you sell to secure the highest possible price.
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Incredibly easy process
Best price across all selling sites. Will definitely use again and have recommended to all friends and family!
Sold his Toyota
Motorway got me £6,000 more than a rival service for my Range Rover. Deal was completed through a reputable dealer who completed the sale quickly.
Sold his Land Rover
Very clear and easy to use
I wanted to get rid of my old car quickly because it wasn't worth much money and I had just bought a new one. I received a decent enough offer via Motorway. Job done - no worries!
Sold his Vauxhall
Quick, efficient and extremely professional. Very knowledgeable and helpful staff. Quickest and smoothest car sale I've experienced in the last 50 years.
Sold his Audi
Really happy with the service
Got me an excellent price within 48 hours. Dealer came to pick the car up a few days later. Took all the hassle out of it! Would definitely use again.
Sold his Mazda
From start to end the process was seamless, excellent service, good variety of quotes, communication was clear and concise and would thoroughly recommend using again.
Sold her MINI
Very straightforward service
Received a fair offer which made it not worth trying to sell privately and the money was in my bank within 20 minutes. This service really was outstanding!
Sold her BMW
Motorway were fantastic
They kept me well informed and within 24 hours the car was sold. Very happy and hassle free. Highly recommend and would use again.
Sold his Volkswagen
Everything it said on the car
Wife needed a new car so the old one had to go, using Motorway was absolutely painless with really good service. They did everything that was said. Brilliant service and payment as stipulated.
Sold his Ford
Absolutely would recommend
The team were sooo friendly. And everything went smoothly. The payment went in the bank within minutes. If you want to sell your car quickly with a good quote, definitely go with this company.
Sold her Citroen
Really easy website to use. Staff on the phone professional and quick with follow up calls at each stage. Got me a great offer - almost £2k more than another well known car buying service.
Sold his Audi
Much better offer
Got a much better offer from Motorway than a well-known national used car buyer. Very professional and efficient collection at a time to suit us. Highly recommended.
Sold his Renault