How do I sell my car with outstanding finance?

Roman Danaev

Selling a car should be easy — you put an ad up online and the potential buyers usually start pouring in. However, the situation gets trickier if you are not technically its legal owner yet. If you’ve purchased a car under a finance agreement, you will need to go through a few more hurdles before you’re able to sell it.

It is very important to remember that it is illegal to sell a car that has outstanding finance due without notifying both the lender and purchaser of the situation. Under a standard hire purchase (HP) finance agreement , the lender is the legal owner of the vehicle right up until the point where the finance has been fully settled. This means that if you want to sell the car, you must arrange for an early termination of the HP agreement.

You should start by letting the finance company know of your plans and arrange for a settlement figure to be drawn up, which will tell you how much you will need to pay them in order to fully settle your loan. UK law states that your lender must post a settlement figure to you within 12 days.

As well as the settlement figure, you might also be charged an early repayment fee and an administration fee on top of this, if the lender stipulates, according to the agreement. However, despite these added expenditures, you should still find that paying off your existing loan early would nevertheless end up costing you less than the remaining payments would have.

Selling a car under finance is extremely difficult (and ill-advised), since any sensible buyer or car dealership will check the Experian and HPI databases before they part with their hard-earned cash. These databases are used by buyers to receive the correct information about any used car they are looking to purchase, which will include information on finance history.

At we are experts in financing cars for customers with all types of credit score – excellent, poor, bad, fair. We compare and find most competitive car loan offers on the market from top lenders. Please visit the car finance calculator to get a same day car loan quote.

View more from The Car Finance Hub
About us

We are the motor finance people

Since 2015 we’ve specialised in motor finance. We’re a family-run company committed to putting our customers first.