Using car finance is a popular way of managing the purchase of a new vehicle, and you can usually secure a car loan quote within minutes from different providers. If you find yourself wanting to change vehicles before the end of your car finance term, you can sell your financed car – but only if you settle any outstanding finances, and only with the approval of your finance provider.

Do you own a car at the end of a car finance term?

There are three types of car finance where you may end the finance term as the legal owner of the vehicle – a personal loan, personal contract purchase (PCP) and hire purchase (HP).

At the end of HP car finance, you will be the legal owner of the vehicle. Once that finance term has ended and you have made all of your repayments, you can then choose to resell the vehicle, as you are its owner.

At the end of PCP finance, you don’t own the car unless you choose to do so, in which case you’ll pay a balloon payment or lump sum. Once you’ve made this repayment, you’re the vehicle’s legal owner, and can therefore choose to resell it.

If you buy the car with a personal loan, then you are its legal owner, and can resell it whenever you choose – just remember to keep making your repayments on this loan.

Is it illegal to sell a car that has finance outstanding?

As described above, there are three types of car finance that enable you to legally own the car at the close of the car finance term. Provided that there is no finance outstanding on this vehicle, then you are free to do with it what you will – including selling it on.

However, if you have a car that still has finance outstanding on it, then you must contact your finance provider before selling it. If you have outstanding finance, that means there are still repayments that you need to make on the car. As such, you are not its legal owner.

If the car has outstanding finance on it, then it is illegal to knowingly sell it on without informing either your provider or the buyer. Failing to disclose that the car still has debts and fees to be settled is fraud, and you may end up prosecuted as a result.

Both the finance provider and the buyer will be impacted should you illegally choose to sell on a car with outstanding finance. The provider may take you to court over unsettled fees and/or breaking your contract terms. Meanwhile, the buyer could see the vehicle repossessed.

Find out more about car finance

If you have any questions about your rights when it comes to selling a financed car that you secured through My Car Credit, our team are on hand to help. Call us on 01246 458 810 or email enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 11.9%

Evolution Funding Ltd T/A My Car Credit

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Borrowing £7,500 at a representative APR of 11.9%, annual interest rate (fixed) 11.87%, 47 monthly payments of £194.81 followed by 1 payment of £204.81 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,860.88, total amount payable £9,360.88.

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