You’ve bought a car on finance, and you have paid back some or most of the loan.
Now you want to sell your car.
This is a common situation, but is it possible to sell a car with outstanding finance?
The answer is yes, but you need to know how to go about it in the right way.
Here’s what you need to know.
You Cannot Simply Sell Your Car
If you have bought a car on finance and you have not yet paid off the loan in full, you cannot simply sell it.
It is actually illegal to sell a car with outstanding finance to someone without telling them about the situation.
However, this does not mean you cannot sell it at all.
You just need to go about it the right way.
How to End the Finance Term
There are a few things you must do to sell your car. First, you must contact your finance company and ask them for the settlement figure.
This is the amount that you will need to pay in order to pay off the remaining loan, and it may include early repayment fees and extra charges like administration fees.
Once you know the total cost you have to pay, you can then consider whether you want to pay this amount and sell your car.
Remember that once you have received the settlement figure, you are not committed to anything.
You will also be given a settlement date. If you decide to pay the amount due, make sure you pay by the settlement date.
If you miss the date, you will have to ask for another settlement figure and settlement date.
Is It Worth Doing?
There is a good chance the amount you pay in the settlement figure is less than the amount you would pay were you to continue to make your monthly payments. However, it may be difficult for you to come up with the money all at once, so it depends on your situation.
One thing to be aware of is negative equity. Negative equity is where the value of your car is worth less than the amount you owe to the finance company, which can happen because cars depreciate in value quickly.
You should therefore get a valuation for your car and compare this figure to the settlement figure.
If it is less than the settlement figure, you are in negative equity and you may want to hold onto your vehicle for a bit longer to avoid being left out of pocket.
There may be other options available.
Usually, you have to pay off the amount due yourself before selling your car.
But you may be able to find companies that can pay off the outstanding finance as part of a deal to buy your car from you.
Some buyers may deal directly with the finance company to settle the balance, but otherwise you will have to settle it yourself.
Sell Your Car with Outstanding Finance
As you can see, selling a car with outstanding finance is possible.
It may be slightly more difficult than selling a car that you own outright, but it is still possible to do. Just make sure you go about it properly, and don’t try to sell your car without informing the buyer that it still has outstanding finance.