How to Sell a Car with Outstanding Finance

So you've had enough of your current car, and it's time to sell it and move on to pastures new. What if you don't actually own the car though? Isn't that going to make selling it rather tricky? With most new cars and many used ones being bought with some form of financing, wanting to sell a car you haven't fully paid for isn't that unusual of a situation. It can get complicated, but if you play it right there are ways to keep your buyer and your lender happy and get what you want. Read our guide to the basics and find out how you can sell a car with outstanding finance.

By Gumtree Editorial Team

21 June 2021 4 min read

How to sell a car with outstanding finance

Be transparent

When you’re trying to sell a car with outstanding finance, honesty is definitely the best policy. It’s illegal to sell a car with outstanding finance without telling the buyer. If the car is on hire purchase (HP) or personal contract purchase (PCP) financing, it’s not yours to sell until you’ve settled the deal you got it on.

Work out how much your car is worth

To sell a car you have under a financing agreement, you’ll need to settle the deal. Unless you can sell your car for more than it’ll cost you to settle the deal, you’re in negative equity and you’ll end up out of pocket. If this is the case, you might want to consider hanging onto the car until later in the deal, when it’ll cost you less to settle. Get your car valued and you’ll have a better idea where you stand.

Settle your HP deal

If you want to sell a car you still owe HP payments on, you’ll need to end the HP agreement early. Contact your finance provider and ask them for a settlement figure. Pay this within the stipulated time and the car will be yours to sell. Check your contract for details of early exit fees. These are often 1% of the outstanding total, or 0.5% if there’s less than 12 months left on the deal. Payments under £8,000 will normally have interest added instead of these charges.

Settle your PCP deal

As with HP deals, you can’t sell a car you’ve got on a PCP deal until you’ve paid it off or paid the settlement figure. You have the right to end a finance deal early at any stage by paying the settlement figure, so contact your finance company and ask them to provide one. Be aware this settlement figure may include an early exit fee and other charges as well as the remainder of the loan. Pay that, and the car is yours to sell.

See if dealers will help

Want to sell the car to raise funds to buy another one? Dealerships make their money on financing deals as well as car sales, so many will be happy to help you sell the old car as part of a refinancing deal. Some finance companies may allow you to sell the car in order to make the final payment on a PCP deal – talk to them to see what they permit.

Sell a car that isn’t security for the loan

HP and PCP deals use the car itself as security for the loan. But many cars are bought with personal loans secured against something else – your house, for example. If this is the case, the car isn’t tied to the loan. You can sell the car without having to worry about anything other than how you’re going to keep paying that loan back.

If you want to sell a car with outstanding finance, you need to talk to your finance company about how you’re going to settle your agreement. There’s usually a way to do that, but figure out how much your car is worth and how it works under the specifics of your existing arrangement before deciding to move ahead.

Take a look at our expert guides if you need to cancel your car finance early or are looking for more car finance advice.

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