Can I sell my car with outstanding finance?

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Can I sell my car with outstanding finance?

There are many legitimate reasons for wanting to sell your car before you’ve finished paying off any outstanding finance. Perhaps your circumstances have changed and the car is no longer fit for purpose. Or maybe your financial situation is different and you can no longer afford to keep up with the repayments. Whatever the reason, it’s important to know that it’s not impossible to sell a car if you still have time left on the finance agreement, even if it’s a little trickier than selling a car normally.

Paying off the outstanding finance

The reason that selling a car with outstanding finance is difficult is that you don’t actually own the vehicle until you’ve paid off the finance. That means it’s not yours to sell. But while you can’t sell a car with outstanding finance, you can pay the outstanding balance off early to give yourself full ownership of the car.

If you plan on selling the vehicle, you’ll need to contact your finance company to discuss an early settlement figure. This will likely be the money left to pay on the car plus an early exit fee of between 0.5% and 1% of the car’s total value.

Because of the additional fees and the sharp drop in value that every car goes through after purchase, it’s possible to end up in a situation referred to as ‘negative equity.’ This is where the settlement price is more than you could expect to get from a sale, losing you money on the whole process.

If you get a settlement figure and find that you’d be in negative equity, it can be better to wait a little longer and make a few more payments before settling. It’s common to be in negative equity until you’re about two-thirds of the way through your repayments.

Getting help from a car buying company

It’s not always possible to stump up the figure required by the finance company for a settlement. If a lump sum doesn’t work for you, you’re not out of options. Some car buying companies, including those that work with Jamjar to provide quotes for our customers, will arrange the finance repayment for you and deduct that sum from the money they pay you. This means that you don’t need to pay off the finance deal before receiving the money from the car.

Whether or not you have the money for the settlement agreement, if you’re looking for convenience this is the best route to go down. However, you still need to watch out for negative equity. If the settlement agreement is more than a car buying company is willing to pay, it will still be a loss for you.

Selling a car that was bought with a loan

A regular loan for a bank or other private lending company is a different matter. If you bought a car with a loan rather than a finance plan, you own the car. Your lender won’t care what you do with the vehicle so long as you keep up your repayments. If this situation was worrying you, then rest assured that you can sell a car bought in this way without any trouble.

If you want to see how much you could get for your car, get a quote from Jamjar, the car buying comparison site. We compare expert car buyers around the UK and can get you a great deal that will also allow you to pay off outstanding finance.