Guide to selling a car with outstanding finance: who will buy it, fees & more
Want to sell your car quickly but worried about outstanding finance? Here’s a look at all your options and what you need to do before selling.
Selling a car with outstanding finance can be more difficult than a traditional sale, but one easy option is to sell it through a car-buying site.
Here’s what you need to know about if you have such a car to offload, including who will buy cars with outstanding finance, what fees you might have to pay, and generally how the process works.
Why selling a car with outstanding finance has become so common
Over 85% of the cars in the UK are bought with some form of finance agreement, according to car-buying site Motorway.
If your car has finance on it, it’s illegal to sell it privately, (unless you pay off the finance first), as the finance lender owns your car, not you.
One easy option is to sell your car through a car-buying site – in most cases, these companies can settle any outstanding finance for you before buying your car.
Selling a car with outstanding finance: how it works
The way selling a car with outstanding finance usually works is as follows:
The car-buying site will make you a final valuation price for your car. Once you’ve agreed to sell, it will then pay off your finance company, deduct this amount from your offer and pay you the difference.
Depending on which car-buying site you use, and their valuation process, you may not be asked about any outstanding finance until you’ve had your initial on-screen valuation quote.
With Cazoo, which has a detailed online valuation process, you will be asked if your car has outstanding finance and, if so, need to provide a settlement figure before you can be given a valuation offer.
We found all the car-buying sites make it clear on their websites whether they accept vehicles with outstanding finance, and you can find details of this under their ‘frequently asked questions’ section.
Worth knowing that if the amount you owe on finance ends up being more than the valuation offer, you’ll either need to pay off the finance yourself before selling or may be able to part-exchange your car, if the car-buying site offers this option.
Get a settlement figure before contacting car-buying sites
Man making a phone call (Image: Priscilla Du Preez – Unsplash)
If your car has a finance deal on it and you’re thinking of selling – speak to the finance company first to get a ‘settlement figure’.
This is generally valid for 10 days so you’ll need to sell your car within this time limit.
The reason for getting the settlement figure first is that valuation quotes from some car-buying sites like Money4YourMotors only last 5 days – so if the finance company are slow to send out your settlement figure – you may miss out on your initial valuation offer.
If you decide to go ahead and sell, you will need the settlement figure in writing and may need to email it to the car-buying site ahead of the agreed inspection and handover date.
Can I sell a car with outstanding finance to a car-buying site?
You can sell your car with outstanding finance – but there are several types of finance agreement.
These include PCP, (Personal Contract Purchase), HP, (Hire Purchase), and PCH, (Personal Contract Hire).
Here’s a quick breakdown of how each works:
- HP – Hire Purchase – with this type of agreement the lender or finance company owns the car until you’ve made all the payments;
- PCP – Personal Contract Purchase – if you want to sell your car part way through the finance agreement, once again you need to have made all the repayments or pay the outstanding settlement figure;
- PCH – Personal Contract Hire – if you’ve been renting your car using PCH or another form of lease agreement you may not have the option to sell part way through the agreement.
If you don’t know which one you’ve got, check first.
Most car-buying sites will only take cars with the first two forms of finance.
How will selling a car with outstanding finance affect the price I get?
When selling a car with outstanding finance, you should expect to get your final valuation offer (after an inspection of the vehicle), minus any outstanding finance.
Cazoo do the sums clearly for you on this.
At the end of the online quote process, you’ll see your valuation offer, the settlement figure for the outstanding finance and the amount due to you after Cazoo have paid this off – so it’s clear how much you’re getting before you go ahead and accept the offer.
There may be fees or charges for early settlement, depending on your agreement, made by the finance company so do check this with them.
Which sites will buy a car with outstanding finance?
You won’t be asked if your vehicle has outstanding finance as part of the initial valuation process but will need to tell them if you want to go ahead and accept.
You can book an appointment with Wewantanycar who will then need to check details of the outstanding finance.
On handover, Wewantanycar will deduct the settlement figure from your valuation with the money paid direct to your bank account within four days.
You can sell a car to Motorway if it has finance like a PCP, (Personal Contract Purchase), or HP (Hire Purchase), as their website promises that all their dealers can clear any outstanding finance for you when you sell your car.
On the day your vehicle is collected, any outstanding finance is deducted from the price you get, the dealer pays off the finance company and you get the valuation figure minus the outstanding finance paid directly to you via bank transfer.
Motorway do not buy cars on PCH, (Personal Contract Hire), or finance.
Cazoo will still buy a car with outstanding finance – just providing the valuation offer is more than any outstanding finance.
If not, your only option is to part exchange with Cazoo rather than sell outright.
With Cazoo, as part of the initial online valuation process you’ll be asked if your car has outstanding finance on it – and if so, how much.
Before the handover date, you’ll need a ‘settlement letter’ from the finance company and must email a screenshot or copy of the letter to Cazoo.
Details of this are all on the website.
You can sell a car to Money4YourMotors with outstanding finance provided their online ‘pre-inspection offer’ is at least £500 more than the finance settlement amount.
Money4YourMotors say they’re unable to purchase vehicles that have ‘negative equity finance’ – where more is owed on the vehicle than the offer given online, which tends to be standard across the car-buying sites.
When it comes to getting paid, any outstanding finance can be settled for you by Money4YourMotors and the remainder of the valuation offer is paid to you directly by bank transfer.
You can sell a car to Arnold Clark if it has outstanding finance.
In this case, Arnold Clark will pay the settlement figure to the finance company directly, take this off your valuation offer and you get your money in your bank account within three to five working days.
If the outstanding finance is more than the valuation offer, Arnold Clark can still buy your car.
However, you’ll need to pay the finance settlement figure on the handover day by debit or credit card.
If you’re selling your car with finance you still start off in the usual way by getting an online valuation.
Then book an appointment at the local branch – Webuyanycar estimate the ‘average’ drive time to your local branch is 13 minutes.
You’ll need to bring an up-to-date settlement letter from your finance company that includes your settlement amount and agreement reference number.
Your car is then inspected, which is standard procedure, and if the valuation is higher than the settlement amount, Webuyanycar will pay you the difference.
If the valuation is lower than the settlement amount, you’ll need to make a card payment to cover the shortfall before selling.
Do car-buying sites charge extra fees if I’m selling a car with outstanding finance?
None of the car-buying sites we contacted including Cazoo, Webuyanycar, Wewantanycar, Motorway, Arnold Clark and Money4YourMotors make any additional charge for settling any outstanding finance on your car.