Can I Part Exchange a Car on Finance?

Man equiring about part-ex on finance

Getting a new car is exciting, but if you’ve already got a vehicle that you purchased via car finance, it might seem complicated. In theory, part exchanging your financed car is a way of trading in your current car for a new one. Moreover, you can use the value of the old one to support the new purchase. In this post, we’ll explore whether it’s possible.

What is a part exchange?

If you part exchange your financed car, you’re trading it in for a new one, and putting any proceeds from the exchange towards the new purchase. Part exchange will typically be more convenient than a private sale, as the dealer will manage all the paperwork. It’s also a way of changing car without having to either pay off your car finance early or cancel it outright.

Where you’re eligible for part exchange, it can be a great way of finding a new set of wheels. However, not everyone is eligible for a part exchange – it’s contingent on what kind of car finance you have.

Who is eligible for part exchange?

You should be able to part exchange your car if you purchased a car on finance via either a Hire Purchase (HP) deal, Personal Contract Purchase (PCP) deal, or a personal loan. However, if you have financed your car via a PCH agreement, you won’t be eligible, as you are not the car’s legal owner at any point.

If you financed your car via a PCP deal, you can part exchange your car at the end of the finance agreement and put any value toward the new vehicle (or a deposit for the same).

You can also part exchange your car during your agreement – but whether or not this is a good idea depends on how much your car is worth, and how much you still owe. You’ll have to settle any outstanding balance before the part exchange can take place.

How to part exchange a car on finance

Before you think about part exchange, you need to know your car’s value, as well as anything you still owe to your finance plan. The value of your car will be affected by how much you’ve cared for it, but it’s also dependent on the car’s mileage, service history, and specification.

It’s best to go into a part exchange with a car that’s of greater value than any outstanding finance. That means you’re in positive equity. You can then put the positive equity toward the cost of a new vehicle. Furthermore,  remember that if you’re looking to purchase your new car by finance, the higher your deposit payment, the lower your monthly repayments will be.

You’ll need to get a settlement figure from your lender, too. This can sometimes include a final balloon payment and there may also be an early termination fee.

You may find you have a PCP deal that leaves you with a vehicle that’s worth more than your outstanding final payment. This is because you’re borrowing against the depreciation value of the car – not the purchase price. This puts you in a good position for a part exchange, as you’ll be in positive equity, as described above.

Be aware that you’ll also need the car’s logbook – known as its V5C – as well as any relevant paperwork, the vehicle manual, MOT and service documents. You’ll also need to disclose the settlement figure agreed on with your car finance provider.

What about negative equity?

If the amount remaining on your finance is more than the car’s value, then you’re in negative equity. You may still be able to part exchange the car. This would require either you or the company you’re part exchanging the car with to pay a lump sum, rolling any debt into a negative equity finance agreement.

Be aware that with a negative equity finance agreement you will be paying off both your old car and new car, so you will likely notice a serious increase to your monthly repayments. Interest rates will also be higher, and you’re at higher risk of going into further negative equity.

Talk to My Car Credit

If you’ve got questions about whether a part exchange is for you, contact My Car Credit today. We can address any concerns you may have and help you establish your car finance eligibility.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

When is the Best Time to Part Exchange a Car?

Lady with car keys knows when is the best time to part exchange a car

Part exchange – also known as PX – is a hugely popular way for Brits to sell their car. It allows you to avoid the hassle of privately selling. Furthermore, you can use your current car to partially finance a new vehicle.

There are real benefits to part exchanging a car. As such, the best way to take advantage of these is to part exchange your car at the right time. That’s why we’ve outlined exactly when that is below, as well as detailing what to consider if you are thinking of embarking on a part exchange. 

What is a part exchange? 

Put simply, a part exchange is when you use your current car as partial collateral for a new one. You’re essentially trading your current car in for another – usually more expensive – vehicle and using it to finance that purchase. 

How does a part exchange work? 

Typically, a dealer will evaluate your current vehicle. Once this value has been confirmed and settled upon by both parties – that is, you, as the seller, and the dealer, as the buyer – then the dealer will take the value of your current car off the price of the new one.  

By part exchanging, you’re therefore partially covering the cost of your new vehicle with the total value of your old. The state of your current vehicle will inevitably impact its valuation by the dealer – as will the time of the year when you choose to part exchange. 

When is the best time to part exchange a car? 

New number plates are released in the UK twice a year. This happens in the months of March and September. One of the best times to part exchange a car can therefore be February and August – the months prior to these new release dates.  

That’s because buyers will tend to wait until these new releases, which can result in slow sales for dealers. Dealers may therefore be more willing to offer a good deal – or at least to negotiate – around these months. 

How to ensure your current car holds its value 

There are a number of factors that could impact the dealer’s evaluation of your car. 

Damage 

This is an obvious one, but any damage to your vehicle’s wheels, paintwork, or body can impact its value. Dents and scratches can deplete this by hundreds of pounds, so the condition of your vehicle is vital in securing a part exchange that is financially beneficial for you.  

If you’re time-strapped and haven’t managed to get your car in for a service, be sure to do your research and know how much the repair of a dent or scratch would cost. You can then ensure that any salesperson doesn’t deduct any higher than this number.  

Keep on top of your MOT and service  

A full service history adds value to a car, so keeping a record of this is essential. In fact, an incomplete service history can deplete your vehicle’s value by up to 10%.  

You also want to ensure that you have more than three months left on your MOT, and make sure you’ve kept hold of any spare keys. 

Low mileage 

Models with low mileage, exciting add-ons, or unusual colours may add value to your car. It’s worth bearing in mind what kind of car the dealership is after – there’s no point offering your Mini to a dealership that specialises in Range Rovers. 

Remember to negotiate 

Remember to go in with confidence but be prepared to haggle. Negotiations are always a component of a part exchange. That said, it’s important to feel that you’re being heard and not taken for a drive (pardon the pun).  

Walk away from the conversation if it’s not going anywhere and re-evaluate your options. Dealers are there to make money and get the best deal possible, which may end up with you feeling short-changed. Remember that it’s always an option to sell your car privately – although this will require more effort on your part. 

Financing your purchase 

Part exchange will cover some of the cost of your new car. You can maximise how much it covers by knowing the best time to part exchange a car. But for the rest, you’ll usually need to call on car finance. 

That’s where My Car Credit can help. Our friendly team can advise on car finance eligibility, before finding a great deal to help you spread the cost of your purchase. Contact us today on enquiries@mycarcredit.co.uk to find out more. 

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

How Does Part Exchange Work On a Car?

Driving away after checking how does part exchange work on a car

Nowadays, there are several ways to swap your current motor for something more suitable. Part exchanging your car is one of the most popular methods because it’s quick, easy and accessible to almost every motorist. All you need to do is find a dealership and start haggling over the price.

However, it’s not as straightforward as picking a brand-new vehicle and driving away in it that very day. Before you are ready to sign on the dotted line, you need to understand the basics of the strategy. How does part exchange work on a car? Keep reading to find out more.

How does part exchange work on a car?

In its simplest form, the part-exchange process is hassle-free. The trick is to find a replacement motor that you want as an upgrade to your current vehicle. However, instead of selling your old car privately or sending it to the scrapyard, you can have it valued by the dealer. The quote you get is then subtracted from the price of the car you want to buy, making it cheaper and more affordable.

When it works well, part exchange is a suitable option for all parties. After all, you get a fantastic deal on a vehicle, and the dealer can add an item to their inventory that they can mark up in the future. Of course, they also get the car you buy off their hands. Everyone’s a winner!

What should you look out for?

The value of your vehicle

It sounds obvious, but it’s essential not to forget the value of your car. Some owners accept the first offer they receive without negotiating over the price. Even if you think the figure is high, you should shop around because there might be better offers on the table. However, you can’t do this without obtaining a ballpark number first, something you can do with an online valuation tool.

Once you know what quotes you should expect, you can ensure you don’t sell yourself or your car short during the part exchange process. A smart way to do this is to research how much like-for-like models sell for privately and at dealerships.

The aesthetics

The way your car looks will dictate how much people are willing to pay, which affects your bottom line. So, if there are scratches and scrapes, you should consider repairing them beforehand. Doing it yourself is a savvy option as hiring a professional will cost a fee. As far as the interior goes, a DIY valet will only cost you time.

Apart from the visual aesthetics, don’t forget to bring the relevant paperwork. Without the vehicle’s history, buyers will be less likely to make an offer as they won’t know if they can trust what they are purchasing.

Affordability

Just because a dealer will reduce the upfront price doesn’t mean your dream car will be affordable. We’ve answered the question of how part exchange works on a car but you still might not have the cash to pay for the car outright, leaving you in a pickle. Thankfully, you can get a car finance quote from My Car Credit and figure out how much you can pay in monthly instalments.

Typically, car finance options make vehicles much more affordable, giving you the ability to level up your lifestyle and finally drive around in style and comfort. To learn more about finance and how our services can help you, please don’t hesitate to contact us to speak with an advisor.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!