If you are selling your car privately , you will have to pay off what you owe first. If you try to sell your car to anyone knowing there is outstanding finance on it, and without making buyers aware of it, this is illegal. Yes you can. Clearing outstanding finance with Motorway is easy and dealers we work with clear finance all the time. Once you have chosen to proceed with your highest offer on Motorway, the buying dealer will need to see a finance settlement letter to clear the finance.
The dealer will pay off the finance as part of the purchase and you keep any remaining funds. Payment is sent fast, straight into your bank account. But the finance company will still want to be paid and that means they will likely chase you to make sure you are the innocent party. Yes, many dealers and car buying sites will be happy to settle your outstanding finance for you based on the sale of your car.
If you choose to sell your car privately, then all your finance will need to be paid off. If you try to sell your car to someone without letting them know you still owe money on it, you are acting illegally.
Voluntary termination is when you ask your finance company to end your finance payments early. There are a few other key things to keep in mind, too:. The retailer will generally deal with this transaction on your behalf — although your current finance company may need your permission to liaise with them.
It can sometimes be difficult to part exchange a car with negative equity and whether or not you can depends on the difference between settlement figure and value, and sometimes, whether you can provide a lump sum to help reduce this difference. If your circumstances have changed and you cannot settle your current finance to either sell or upgrade your car, then it can be worth exploring handing a car back to the finance company. When your car is repossessed, it will be sold — paying off all or some of the settlement figure.
Voluntary surrender of your car can lead to serious financial repercussions and can severely damage your credit rating. When you have this information, you can decide which next step is going to suit you, your motoring requirements and your finances moving forward. Enter a few details to sign up to the latest automotive news from Car. Share this guide: Twitter Facebook Email. Without a large-ticket item to use as security, there's a larger risk the bank won't get its money repaid in full.
The larger the bank's perceived risk, the higher the interest rate. In a lot of cases, you'll need the sale price to go directly to your lender to pay the outstanding balance on your loan. In cases where the loan amount is more than the car's value, you can repay the gap between the sale value and the debt yourself. The bank will then lift the encumbrance from the car, leaving the new buyer with a clear title. If you have other lending options available to you, it can be a good idea to remove the car's encumbrance all together before trying to sell.
You can redraw against your mortgage, take out an unsecured loan or get a cash advance from your credit account. However, each of these options has a drawback. Unsecured loans and cash advances carry higher interest rates than secured loans, which can leave you handing even more back to the bank. Mortgages can take decades to pay off, meaning that a small redraw today can cost significantly over the life of the mortgage, although home-loan rates are historically low at present.
If you're selling your car with a mind to upgrading, rather than selling outright, dealers offer a mostly hassle-free way to upgrade. Because dealerships make their money on finance as well as car margins , they'll be only too happy to organise finance to pay out your car's outstanding balance and cover the cost of upgrading. A similar deal applies if you're downsizing to a less expensive car, but finance can be tricky in this regard.
The settlement amount will be deducted from the amount paid to you for the car. Before you can do anything, whether you have a car on Hire Purchase HP or Personal Contract Purchase PCP , you'll need to find out your car's settlement figure in order to settle your contract early.
This figure is the total amount you'll need to pay your lender to terminate your contract to end the finance agreement and will include any fees. Lenders are required, by law, to provide the settlement figure within 12 days of the request and you should request this figure in writing. With HP or PCP finance agreements, you're unable to sell the car privately whilst you have outstanding finance as the lender is the owner of the car until you have repaid the finance agreement or paid the settlement figure in full.
It's actually illegal to sell the vehicle to a private buyer without informing them of the outstanding finance and can result in you being sued for fraud. If you have a car on hire purchase HP , the lender remains the owner until the finance is settled or all payments have been made. Once you've obtained the settlement figure and paid it off, within a set period of time, the car will be yours to sell.
Finance agreements vary significantly, therefore it's important to thoroughly check your paperwork to find out the terms and conditions of your particular contract.
If you try to leave your agreement earlier than six months this may have a negative impact on your credit rating, which can make obtaining credit difficult in the future.
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