Advice
Selling a car with outstanding finance (2025 update)
Learn how to legally sell a car with outstanding finance, including Hire Purchase and Personal Contract Purchase agreements, and understand your options for early settlements and dealership trades.
Words by: Andrew Woodhouse
Last updated on 14 January 2025 | 0 min read
While you can sell a car bought on finance, you have to get the right permission and take the right steps first.
Until the finance is settled, the car is still owned by the finance company and not yours to sell. And not telling a potential buyer your car has outstanding finance is illegal. So, it’s essential you sort things properly. In this guide, we’ll explain how.
Until the finance is settled, the car is still owned by the finance company and not yours to sell. And not telling a potential buyer your car has outstanding finance is illegal. So, it’s essential you sort things properly. In this guide, we’ll explain how.
Can I sell a car with outstanding hire purchase (HP) finance?
You cannot sell a car with outstanding hire purchase (HP) finance, until the finance is settled.
With hire purchase, you make fixed monthly payments over an agreed length of time and will legally own the vehicle once all payments have been made. To sell the car, you’ll have to end your hire purchase agreement early. Ask your finance company for a settlement figure, which is the sum you need to pay to end the finance agreement and may include various charges and an ‘early exit fee’. You’ll have a set period to pay that figure off, after which the cars will be yours to sell.
With hire purchase, you make fixed monthly payments over an agreed length of time and will legally own the vehicle once all payments have been made. To sell the car, you’ll have to end your hire purchase agreement early. Ask your finance company for a settlement figure, which is the sum you need to pay to end the finance agreement and may include various charges and an ‘early exit fee’. You’ll have a set period to pay that figure off, after which the cars will be yours to sell.
Other options
Returning the car
You may be able to return the car if you've paid less than 50% of the total cost and agree to pay the remaining instalments to cover half its value. Check your contract for confirmation. If you have paid over half of the car's total cost, including interest and fees, you likely cannot return it.Voluntary termination
If your HP finance agreement includes a voluntary termination clause, you should be able to return the car without making any additional payments. Voluntary termination is normally only offered if you’ve paid at least 50% of the total cost. This shouldn’t affect your credit rating.Early exit fees
Check your contract for mentions of early exit fees. Often, contracts specify you’ll pay 1% of your outstanding total, or 0.5% if you’ve got less than 12 months left on your contract. You normally won’t have to pay interest, though some contracts specify you’ll pay interest rather than charges if you’re paying less than £8,000.Can I sell a car with outstanding personal contract purchase (PCP) finance?
Until you have repaid your personal contract purchase (PCP) or paid a settlement figure, you cannot sell the car.
With PCP, you make fixed monthly payments over an agreed length of time and, at the end of the contract, choose to buy the car or return it. As with a hire purchase agreement, you should check your contract for early exit fees and voluntary termination clauses. You’ll normally have two options. 1. You could pay off the PCP agreement early and sell the car once you’ve paid the settlement figure. In some instances, it may cost less than continuing to make monthly payments. 2. You could return the car. As with HP finance agreements, you might be able to return the car if you’ve already paid half the agreement off (including interest and fees). You may be able to top up the difference in a final payment so that you can return the car. Requesting information from your lender does not commit you to settling the loan. However, once you make a payment to settle it, you cannot reverse your decision. If you miss the settlement date, request a new figure. After paying off the amount to the finance company, you can sell the car.
With PCP, you make fixed monthly payments over an agreed length of time and, at the end of the contract, choose to buy the car or return it. As with a hire purchase agreement, you should check your contract for early exit fees and voluntary termination clauses. You’ll normally have two options. 1. You could pay off the PCP agreement early and sell the car once you’ve paid the settlement figure. In some instances, it may cost less than continuing to make monthly payments. 2. You could return the car. As with HP finance agreements, you might be able to return the car if you’ve already paid half the agreement off (including interest and fees). You may be able to top up the difference in a final payment so that you can return the car. Requesting information from your lender does not commit you to settling the loan. However, once you make a payment to settle it, you cannot reverse your decision. If you miss the settlement date, request a new figure. After paying off the amount to the finance company, you can sell the car.
I’m selling to a dealership, will they sort it for me?
A retailer or company may arrange to pay off the outstanding finance as part of the deal to buy the car.
Before you commit, it’s worth finding out if your current car finance is in ‘negative equity’. You’ll need to obtain a settlement figure and get a valuation for your current car. If your car's value is lower than the settlement figure, you are in negative equity and might consider keeping the car longer. If you decide to proceed, you can start looking for a new car and approach a lender or broker to discuss refinancing options. If approved for refinancing, your new finance deal will include the cost of the settlement figure to pay off the existing finance along with the loan amount for your new vehicle. If you decide to part exchange when you upgrade your vehicle, the part exchange value will be deducted from the overall cost of your borrowing.
Before you commit, it’s worth finding out if your current car finance is in ‘negative equity’. You’ll need to obtain a settlement figure and get a valuation for your current car. If your car's value is lower than the settlement figure, you are in negative equity and might consider keeping the car longer. If you decide to proceed, you can start looking for a new car and approach a lender or broker to discuss refinancing options. If approved for refinancing, your new finance deal will include the cost of the settlement figure to pay off the existing finance along with the loan amount for your new vehicle. If you decide to part exchange when you upgrade your vehicle, the part exchange value will be deducted from the overall cost of your borrowing.
Can I sell my car to pay off finance?
You can only sell your car once you have settled the finance agreement, which requires a lump sum payment. Alternatively, include the sale in a refinancing deal.
Just be cautious of charges when ending the finance agreement early, as the car might be worth less than the settlement figure, leaving you in negative equity. The finance company will give you full details of the costs involved in settling the finance; and if you want to find out how much your car is worth, you can use our free valuation service.
Just be cautious of charges when ending the finance agreement early, as the car might be worth less than the settlement figure, leaving you in negative equity. The finance company will give you full details of the costs involved in settling the finance; and if you want to find out how much your car is worth, you can use our free valuation service.
Can I sell my car while I'm paying off a loan?
Yes, you can, because paying off a loan is a very different situation to when you’re paying off finance. With a finance deal, the deal is secured against the car, but there’s no such link with a personal loan. The car is your property from day one, and you can do what you want with it. However, remember that, even when you’ve sold the car, you still have to finish paying off the loan.
Related: Sell your car with Autotrader.