Yes, you can sell a car on HP (Hire Purchase) or PCP (Personal Contract Purchase) finance, even if there’s outstanding finance. However, you cannot sell a leased car, as lease payments do not build equity in the vehicle like HP and PCP agreements do.
| Type of Finance | Deposit Required? | Who Owns the Car? | Can It Be Sold with Motorway? |
| PCP | Yes | Finance company unless balloon payment is made | Yes, subject to finance settlement |
| HP | Yes | Finance company until the balance is paid off | Yes, subject to finance settlement |
Under HP agreements, the debt is repaid in equal monthly installments, while PCP agreements leave a significant portion (the “balloon payment”) to be paid at the end if the buyer wants full ownership.
PCP is currently the most popular car finance option in the UK, with over 90% of new car purchases in 2022 financed this way. Its appeal lies in lower deposits, reduced monthly payments, and shorter repayment terms. However, PCP contracts often include mileage limits and wear-and-tear charges, which can affect the car’s final value.
Can You Sell a Car with Outstanding Finance?
Yes, you can sell a car with outstanding finance. To do so, you’ll need to:
- Request a settlement letter from your finance provider, detailing the remaining balance.
- Accept an offer from a dealer willing to settle the outstanding finance directly with your lender or through you (if both parties agree).
Note: If your car’s sale price does not cover the outstanding finance, you’ll need to pay the shortfall to settle the agreement.
Who Owns My Financed Car?
In both PCP and HP agreements:
- The registered keeper on the V5C logbook is you.
- The legal owner is the finance company.
You cannot legally sell the car until the finance is settled. You have two options:
- Wait until the finance is paid off and sell the car outright.
- Request a settlement letter, then sell the car to a dealer who will pay the outstanding balance and give you any surplus.
Selling before the finance is fully settled can be a smart move, especially if your car’s market value is high. Use tools like Motorway’s Car Value Tracker to monitor your car’s value and identify the best time to sell.
Positive Equity vs. Negative Equity
- Positive Equity: When your car’s value exceeds the settlement figure.
- Negative Equity: When the settlement figure is higher than your car’s value.
Under PCP agreements, a Guaranteed Minimum Future Value (GMFV) acts as a stabiliser for your car’s worth, ensuring it won’t drop below a set figure during the contract.
Steps for Selling a Car on Finance
1. Get a Settlement Letter
Contact your finance company to request a settlement letter. This document is essential for selling your car, as it outlines the balance needed to pay off the finance.
- Check for early settlement fees in your finance agreement.
- Settlement figures typically have an expiry date, so ensure your sale is completed before this date.
2. Value Your Car
Understanding your car’s market value is crucial. Use Motorway’s Car Value Tracker to get an accurate, up-to-date valuation and identify the best time to sell.
3. Prepare Your Car
Boost your car’s appeal by following these steps:
- Gather essential documents, including:
- V5C logbook
- Service history
- MOT certificates
- Settlement letter
- Clean your car thoroughly, inside and out.
- Fix minor damage, like scratches and dings.
- Ensure spare keys are available.
4. Get an Offer
Upload your car’s details to Motorway or another car-buying platform to receive offers. Make sure to disclose that the car has outstanding finance.
5. Confirm the Sale
The buyer may inspect your car and documents before completing the sale. Depending on the service, your car may:
- Be collected from your home.
- Require delivery to a local hub.
Motorway ensures free home collection for all sellers.
6. Settle the Outstanding Finance
The process depends on your lender and buyer:
- Some buyers settle the finance directly with your lender.
- Others may transfer funds to you, leaving you to pay off the balance.
7. Complete the Sale
Finalise the paperwork with the buyer and complete the sale.
8. Receive the Surplus
If the sale price exceeds the settlement figure, you’ll receive the surplus payment directly from the buyer.
9. Communicate with Your Lender
If you’re struggling to meet repayments, consider informing your lender instead of selling your car. Many lenders offer voluntary termination options to help avoid defaulting on car debt.
Why Sell Your Financed Car with Motorway?
- Motorway offers a fast, simple, and free way to sell financed cars:
- Instant Valuation: Enter your reg for a real-time estimate.
- Verified Dealers: Access a network of over 5,000 trusted buyers.
- Best Price: Dealers compete to give you their highest offer.
- Free Collection: The buyer collects your car at no cost to you.
Sell your car in as little as 24 hours, and receive secure payment directly to your bank account.
Ready to sell your financed car? Visit Motorway today to get started!