It’s becoming more and more popular to buy cars on finance, but what happens if you change your mind before the finance term ends? Your family may be increasing in size, meaning that you need a larger vehicle, or you may simply be looking for a change. Many people wonder how to sell a car on finance, including whether it’s actually possible and how to go about it.
In this article, we’ll tell you everything that you need to know about selling your car on finance, whether it’s a hire purchase, personal contract purchase or personal loan.
Can I sell a car on finance?
Whether you can sell your car on finance will depend on the type of finance that you took out when you purchased the car. There’s usually a way to sell your vehicle whilst it’s on finance but it may mean paying off the remainder of the finance first.
It’s illegal to knowingly sell your car with outstanding finance secured to the vehicle, without informing the buyer first. But that doesn’t mean that all hope is lost – there are still ways to sell your financed vehicle.
Read on to learn how to sell your car, whatever type of finance you’ve got.
Selling a car on hire purchase (HP) finance
To sell a car with outstanding hire purchase finance, you’ll first need to end the hire purchase agreement early. How this works will depend on the terms and conditions of your contract as well as the amount you’ve paid.
If you’ve paid less than half of the cost of your agreement, you have the right to return the car. However, you’ll need to pay the remaining instalments to bring you up to half of the car’s value.
If you’ve paid more than half of the costs, you won’t be able to return the car. However, you can choose to pay off your agreement early and then sell the car. To do this, you’ll need to write to the finance company to request a settlement figure. This will tell you how much you need to pay to own the car outright. You’ll then be free to sell your vehicle on.
It’s also worth looking whether your agreement has a voluntary termination clause. This clause means that you have the right to hand back the car to the dealership without making any further payments. However, you’ll usually need to have paid over 50% of your agreement before this clause can be used.
Selling a car on personal contract purchase (PCP) finance
Again, selling a car on PCP finance is challenging as you aren’t the legal owner of your vehicle until you’ve paid off the agreement. However, that doesn’t mean it’s impossible, there are just a few extra hoops to jump through.
You’ll need to write to the finance company to request a settlement figure. Once the agreement has been paid off, you’re free to keep the car or to sell it on. This works well if the settlement figure is less than the price that you could achieve by selling the car.
If you’re likely to achieve a lower price than the settlement fee, it could be worth considering returning the car. If you’ve already paid off 50% of the agreement, you can return the car to the dealership with no further payments. If you’ve paid off less than 50%, you’ll need to pay the difference.
Selling a car bought with a personal loan
If you purchased your car with a personal loan, the process of selling your car is far less complicated. The loan is not secured against your vehicle and you are the legal owner of the vehicle, so you’re free to sell it on at any time.
However, you’ll need to bear in mind that you’re still liable for the loan until the end of the term. This means that you’ll still need to keep making payments towards the loan, even after selling the car, until the loan is paid off.
Part exchanging a car with outstanding finance
If you’re thinking of part exchanging your car on finance, you’ll need to follow a similar process. For hire purchases and personal control purchases, you’ll need to contact the finance company for the settlement figure. This will need to be paid in full, along with any other fees and administration fees before you can part exchange the vehicle.
It’s important to remember that the price you’ll get for part exchanging is usually lower than selling privately. This is because dealerships are looking to make a profit when they re-sell your car. However, part exchanging is fast and convenient, which is why many people choose to use this option.
You’ll also need to consider whether the price you’ll get from part exchanging will cover your settlement costs.
Sell your car to Any Colour Car
If you want to avoid the hassle of a private sale but secure a better price than you might get through part exchanging your vehicle, there is another option. Why not sell your car to Any Colour Car?
When you think of car buying services, you’re probably thinking of a company who will promise you a large pay out but then reduce the price when they view your vehicle. Any Colour Car is different.
We know that used cars are, well, used. We don’t expect your vehicle to be showroom quality and we won’t knock down the price unless there a significant issue. We really do offer a hassle-free way to sell your car.
You can also compare our price with your early settlement fee for your car finance to decide whether it’s worth handing your car back or paying off your finance. The choice is yours!
If you’re ready to find out how much your car is worth, contact us today.