Selling a Car on Finance
15 Dec 2025
Selling a Car on Finance
15 Dec 2025
Selling a Car on Finance: What You Need to Know
If you’re thinking about selling your car but you still have finance on it, you’re not alone. Many drivers assume they can’t sell a car on finance, or worry about what happens if they try to sell a car with outstanding finance by mistake. The good news is that you can sell your car - you just need to follow the proper steps and understand your responsibilities before you hand over the keys.
In this guide, we’ll break down when it’s legal, how each finance type works, how to settle the agreement, and what to do if you simply want to return the car instead.
Can You Sell a Car on Finance?
The short answer: not until the finance is settled. A financed car legally belongs to the lender, not you. This means that you can’t sell the car until the agreement is fully paid off, or until you settle the finance directly with the lender.
If you’re selling your car with outstanding finance without clearing the balance, you could run into serious problems. The buyer doesn’t gain legal ownership, the lender could repossess the vehicle, and you could be liable for fraud. So it’s important to stay on the right side of things and follow the correct steps.
Why You Can’t Sell a Car With Outstanding Finance
A finance agreement is essentially a loan secured against the car. Until the loan is cleared, the vehicle is still the lender’s asset. Even if you’ve been driving it for years, making monthly payments and looking after it, you don’t officially own it yet.
Here’s the basic rule:
You can sell the car once the finance is paid, or you can settle the finance as part of the sale.
This applies whether you have Hire Purchase (HP) or Personal Contract Purchase (PCP).
How to Sell a Car With Outstanding Finance
If you’re ready to sell the car, the process is straightforward, as long as you follow these steps:
Step 1: Contact your lender and request a settlement figure
This is the amount you need to pay to end the agreement early. It includes the remaining finance plus any fees. Settlement figures are normally valid for around 10 days.
Step 2: Settle the finance
You can settle the finance using your own funds or by selling the car to a dealer who offers a finance-settling service. Many dealerships and online car-buying services will handle this part directly, paying the lender what’s owed and giving you the rest.
Step 3: Get written confirmation
Make sure you receive written proof from the lender showing the agreement is fully closed. Only then can you legally sell the car to someone else.
Selling a Car on Different Finance Types
Hire Purchase (HP)
With HP, you don’t own the car until all payments are made. To sell the car early, you must request a settlement figure and clear the agreement. Once paid off, ownership transfers to you, and you can sell it freely.
Personal Contract Purchase (PCP)
PCP works differently because of the final balloon payment.
Your options are:
-Pay the settlement figure (which usually includes the balloon payment) and then sell the car.
-Part-exchange the car and let the dealer settle the finance.
-Return the car if you’re at the end of the contract and don’t want to keep it.
Just remember - you cannot legally sell the car until the settlement is complete.
Personal Contract Hire (PCH)
PCH is strictly a lease. That means you never own the car, so you cannot sell it at all. If you want to end the agreement early, you must return the car and pay any early termination charges. You can then take out a new finance deal if needed.
What Happens If I Sell a Car with Outstanding Finance?
Some people try to sell the car privately without realising finance is still active. But the lender will find out, and the consequences can be serious.
Here’s what can happen:
-The car can be repossessed from the new buyer.
-You may face legal action for selling something you didn’t own.
-Your credit score may be affected.
-You’ll still be liable to settle the debt.
If you’re unsure whether your car has existing finance, contact the lender or check your credit file.
What Is Negative Equity?
Negative equity is when your car is worth less than the remaining finance. This often happens with cars because they lose value quickly, especially in the first few years.
Common reasons for negative equity include:
-The car’s depreciation is faster than expected.
-You’re early in the finance agreement.
-You put down a low or zero deposit.
-High mileage or damage has reduced the car’s value.
-Market changes (e.g. fuel prices, market shifts, etc).
If you’re in negative equity, you can still sell the car - you’ll just need to pay the shortfall when settling the finance.
Returning the Car Instead of Selling It
You might not need to sell the car at all. Depending on your agreement:
-With PCP, you can hand the car back at the end of the contract.
-With HP and PCP, you may be able to use voluntary termination once you’ve paid 50% of the agreement.
-With PCH, you can return the car early (fees may apply).
If your aim is simply to move on to a different car or lower your monthly payments, returning the car might be the simplest route.
Final Thoughts
Selling a car on finance is completely achievable - you just need to settle the agreement first and make sure the lender’s paperwork is clear. Whether you’re upgrading, downsizing, or simply changing your financial situation, the key is to avoid selling the car with outstanding finance without permission.
If you’re looking for your next car or want to check what you could be approved for, Autodosh can help. With soft checks, clear guidance, and access to lenders who understand real-life budgets, you can explore your options confidently and find a finance deal that suits your monthly repayments and lifestyle.
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Autodosh is a credit broker, not a lender.
Editorial Disclaimer: This content is for entertainment purposes only. Opinions expressed here are the author’s alone, and not those of any bank, credit card issuer, or any other company. This article has not been reviewed, approved, or otherwise endorsed by any of these organisations. NB: The information on this page does not constitute financial advice, please do your own research to ensure that the product/service is right for your individual circumstances.