Can I scrap my car with outstanding finance?

There’s no rougher situation to be in than owning a car on finance that’s decided to have a major meltdown. Sometimes, the cost of repairs can outweigh the remaining finance balance or even the value of the car itself! In this situation, you are probably wondering whether it’s best to just send it to the scrapyard and be done with it, but can you actually scrap a car if there’s outstanding finance?

Outstanding finance means you don’t own your car

Although there are a number of different finance plans, the general rule of thumb is that you don’t actually own the car you’re paying for – at least, not until you’ve paid everything off. This essentially means that you can’t go ahead and turn the car into a cube, not without resolving any debt you have outstanding.

There are some situations where you might be able to sell your car successfully, but you certainly won’t be able to take it to a scrap yard and have it legally scrapped – they’ll know it’s on finance and will refuse there and then.

This is made more difficult by the fact that you are probably in possession of a car that’s not roadworthy, so it’s taking up space and makes getting it repaired a bigger pain than it needs to be.

Weigh up your options

Ultimately, you only have a couple of options when trying to scrap a car that has outstanding finance:

  1. Settle the outstanding debt to gain ownership of the vehicle
    This is the most straightforward approach to take. Fulfilling your finance plan makes you the owner of the vehicle when your agreement terms with the lender end. If you pay off the remaining finance balance, you’ll become the legal owner of the vehicle and can then look into selling it to an authorised treatment facility. Many finance plans will give you ownership at the end, though it’s wise to check! Business finance plans often take back the car after the end of the terms.
  2. Repair the car and continue to use it for the finance period
    If your car is broken and you don’t have the money to settle the financial plan or the cost of repairs isn’t too much, you can consider simply getting it repaired and sitting tight for a little longer. This probably isn’t the most ideal solution, as you’ll be forking out for both the repairs and continued finance payments, but if you absolutely need a car and you can’t afford to pay off the finance plan and purchase a new one, this really is your best options.
  3. Find a buyer that will settle the outstanding finance for you
    This goes back to actually selling the car, which is unlikely if your first thought is ‘this car is only worth scrapping’. Some buyers will settle your outstanding finance plan and buy your car from you in order to get you signed up for a new finance plan with them. This is not a particularly common option and, if your car isn’t in working condition or isn’t worth a great deal of money, highly unlikely to be an option you’ll want to explore.

So can I actually scrap my car with outstanding finance?

Unfortunately, no. It is illegal to knowingly sell or dispose of a vehicle that has an outstanding finance agreement, so you’ll need to look at one of the alternative solutions provided above to legally scrap your car.

If you’re seeking further general advice and guidance on car scrapping, we’ve also written an article discussing how to scrap your car. Alternatively, follow the links below to continue reading further topics.