settlement figure Archives

Is It Illegal to Sell a Car with Outstanding Finance?

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 12.4%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

Can I Part Exchange a Car 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?

A part exchange is a common practice when buying new cars. Drivers give their existing vehicle to a car dealership to cover some of the purchase price for their next car. In most cases, the existing car counts as a car deposit, meaning you don’t need to save up more money and part with a lump sum to get a different car.

Let’s say your car has a current value of £4,000. You can use that as a deposit on a car worth a lot more, then pay the rest yourself or arrange a finance deal for the remaining amount. The latter is advantageous as it spreads the cost to give you more flexibility with what you can afford.

Part exchanging a car is beneficial because it allows you move to your next vehicle sooner, giving your budget a boost by leveraging the value of your car. It also takes away the hassle of selling your existing vehicle privately. Selling a car privately to fund your next car has the added complication of timing everything right and potentially being without a vehicle for a short period. This is all eliminated by part exchanging.

Is it possible for a financed car?

Things are a little more complicated with part exchanging a car on finance, as you may not own the car outright. Until you pay off car finance agreements, the car is usually still owned by your finance provider. That said, you will have paid some of the cost of your current finance agreement via the deposit and monthly instalments, which gives you some value in your current car.

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, how much you have paid off on your financed car and some other factors.

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) agreement, Personal Contract Purchase (PCP) agreement, 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. Also known as leasing, personal contract hire (PCH) essentially means you are paying to use the car but not working towards owning it.

If you financed your car via a hire purchase or 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. This is done with a settlement figure or a negative equity finance agreement, which we discuss below.

How to part exchange a car on finance

There are a few considerations if you want to part exchange a car with a PCP agreement or HP finance agreement. Firstly, be aware that you’ll need the car’s logbook – known as its V5C – as well as any relevant paperwork, the vehicle manual, MOT and service documents.

Here are some additional things to factor into your part exchange deal…

Value vs outstanding finance

Before you part exchange a car, you need to know its 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.

This will then be weighed up against your outstanding finance – how much you have left to pay on your finance contract, including monthly payments and a balloon payment if you have PCP finance. The result of this calculation can give you either positive equity or negative equity, as described below.

Positive equity for a financed car

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.

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

So, positive equity essentially makes your new car finance agreement a little bit cheaper.

What about negative equity?

If the remaining balance 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 or paying a settlement figure.

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.

Getting a settlement figure

To part exchange a car on finance with negative equity, you may need to get a settlement figure from your lender. This is where they’ll confirm any outstanding finance and positive or negative equity, which is used to calculate a settlement figure (or settlement amount) before you can part exchange your current car.

The settlement figure can sometimes include a final balloon payment and there may also be an early termination fee for your car finance agreement.

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 to part exchange a car. If you have an existing agreement, we can advise on the next steps to take with your finance company, before comparing deals from multiple lenders to part exhange a car and move to a new car finance deal.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

HP, Conditional, PCP: The Lowdown on Car Finance Options

Check for car finance without affecting your credit score

Can You Pay Monthly for a Used Car?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car buying early settlement Jan24 part exchange settlement figure

Can I Swap and Change My Car While on Finance?

Woman on phone finding out if she can swap her car on finance

Finance deals are very appealing to modern motorists. Cars aren’t cheap, even when purchased nearly new or used. Sadly, it’s unlikely that you’ll be able to purchase a vehicle outright without coming into a small windfall. Car finance options give you the flexibility to pay for a good motor without accruing a mountain of debt.

However, caveats do apply. For example, you don’t own the car until you’ve paid off what you owe. Therefore, you may wonder, “can I change my car while on finance?”. It’s a savvy question and one you should know the answer to before you commit to a multi-year contract.

Can you swap a car on finance?

The short answer is no, not without settling up with the lender. As the finance payments haven’t been settled, you don’t actually own the car outright just yet. As a result, you need to clear them before you can begin to think about swapping vehicles.

To do that, you’ll need to contact the lender to obtain a car finance settlement figure. This figure is essentially the amount you must pay to end the contract. Once that’s finalised, you can look at the options open to you, three of which are outlined underneath.

What can you do?

There are three methods available to drivers who have a car on finance and want to swap to another deal. They are – pay up, sell your vehicle, or part-exchange with a dealer.

Paying up

Settling up is probably the simplest method if you have the necessary funds. By contacting your lender and clearing the balance, there’s no reason to mess around listing your vehicle and dealing with the admin. The same goes for part-exchanging, too. Of course, the figure could be high depending on how far through your deal you are and how much you have already paid.

Selling your car

Selling the car means you can use the cash to pay off your existing deal. You should receive the current market value of the car, making it easier to make as much profit out of the sale as possible. One issue to keep in mind is the buyer. Some lenders won’t let you sell privately, but they do allow sales to dealerships. In any case, you need to pay off the existing finance agreement first to get your name on the V5.

Part-exchanging

Although it sounds like you’re doing a swap, the reality is that you still need the V5. As a result, it’s impossible to part-ex your existing vehicle without the finance settlement figure. Essentially, part-exchanging means you use any positive equity you have to finance your next deal.

What do I need to do?

There is a selection of essentials. Firstly, you can’t do anything without a valid V5 that’s in your name. Secondly, it’s best to get the car valued so that you understand the figure you’re looking for. Thirdly, working out the equity – positive or negative – will highlight how much you can put down as a deposit on a new PCP or HP agreement.

How we can help

As you can see, taking out car finance doesn’t mean you’re tied to one car if something better comes along. It’s just important that you go about swapping your car on finance in the right way! If you’ve got another car in mind and would like to work out your monthly payments, use our free car loan affordability calculator to do the maths! Alternatively, get in contact to discuss your options on 01246 458 810.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

8 Benefits of Getting an Electric Car on Finance

How Does Car Finance Work in the UK?

Car Finance or Personal Loan – Which is Best for You?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance settlement early settlement end of agreement settlement figure

Can I Sell My Car with Outstanding Finance?

Man handing over car keys after clearing outstanding finance on his car

More people than ever are using finance schemes to buy new and used cars. But what happens when a person wants to sell up or trade-in before they've finished paying the outstanding amount on their contract?

It’s a question we receive time and time again at My Car Credit, so here’s everything you need to know before listing the car for sale.

Can I sell a car with outstanding hire purchase finance?

The short answer is unfortunately not. Until you settle the outstanding fees, the car belongs to the lender and isn’t yours to sell. What’s more, if you tried to make a sale without telling the buyer about the existing finance agreement, you could face severe penalties including car repossession, court proceedings and fraud charges.

However, you can work around these stipulations by contacting your finance company and asking them for a settlement figure. Once you’ve paid this, which amounts to the full sum left on your contract, the car will legally be yours to sell.

A word of warning

If you take the settlement route, it could end up costing you more money than expected thanks to early repayment and administration fees. Check with your lender beforehand to factor in these additional costs before making a final decision.

Another viable option is to visit a car dealership. Provided the settlement amount is less than the car’s total worth, you can put the difference towards a deposit for a new set of wheels. Once you’ve checked the figures, you can get a quote for a new finance deal and arrange monthly repayments with your lender.

Can I sell a car with an outstanding personal contract purchase?

Just like hire purchase agreements, the finance company legally owns the car when you take out a personal contract purchase agreement.

If you wanted to sell, you must follow the same route of acquiring ownership through settlement beforehand.

What about a personal loan?

Personal loans work differently to car finance agreements. Assuming you paid for the car in full, you’re the legal owner of the car, and there are no restrictions when it comes to selling.

Just remember, you’re still liable for the monthly repayments on your personal loan once you’ve handed over possession.

Voluntary termination

Some people look to sell their car because of difficulties keeping up with monthly repayments. However, in this case, an easier option could be voluntary termination.

Provided you have covered at least 50% of the total cost, and your contract includes a voluntary termination clause, you should be able to return the vehicle stress-free without making any further payments.

Are you looking for a car finance deal?

At My Car Credit, our goal is to make securing car finance as simple and accessible as possible, whatever your credit score or budget.

To find out how we can help you, give us a call on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk. One of our knowledgeable team members will get back to you as soon as possible.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Can You Pay Monthly for a Used Car?

Car Finance vs Personal Loan, what’s best for me?

Who is the Legal Owner of a Car on Finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

outstanding finance settlement figure voluntary termination

Settling Car Finance Early: What Is My Car Finance Settlement Figure?

man using mobile to find out his car finance settlement figure

When you take out car finance, it’s important that you understand how your agreement works. One part of this is your settlement figure. Everyone gets excited when they pick up their new car. Whilst we don’t want to be party poopers, if you have taken out car finance, it’s important you understand how to end the agreement when the time is right for you.

How can I obtain my settlement figure?

Obtaining a settlement figure means asking your lender how much is left to pay on your finance agreement.

You might be thinking of changing your car, or you may have decided to pay off your finance balance early. Either way, you will need to contact your lender using the details on your finance documentation.

Your lender can provide you with your settlement figure over the phone, via email (which can take 2-3 days) or by post (which could take 7 or so days). Your settlement figure is valid for 14 days from the date you request it. Once you have paid your remaining balance, the finance company will confirm in writing, and it is important that you keep this letter in a safe place.

What your settlement figure means

Most of the time, your settlement figure will be less than the value of your car. The difference between your car’s market value and the settlement figure can be used as a deposit towards a new car, or as cashback.

When the value of your car is less than the settlement figure, the difference in values is known as negative equity. This often occurs where people change their car early into their finance agreement and have only paid a small deposit.

If you do have negative equity, you can opt to pay it off. Alternatively, some lenders will accept a small amount of negative equity on a new finance agreement.

If you have any questions about obtaining your settlement figure, our car credit specialists are here to help!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How to Refinance a PCP Balloon Payment

Voluntary termination for car finance explained

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance settlement early settlement end of agreement settlement figure

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

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

Find out more about car finance

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

What is a part exchange?

Is it possible for a financed car?

Who is eligible for part exchange?

How to part exchange a car on finance

Value vs outstanding finance

Positive equity for a financed car

What about negative equity?

Getting a settlement figure

Talk to My Car Credit

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

Can you swap a car on finance?

What can you do?

What do I need to do?

How we can help

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

More people than ever are using finance schemes to buy new and used cars. But what happens when a person wants to sell up or trade-in before they've finished paying the outstanding amount on their contract?

Can I sell a car with outstanding hire purchase finance?

Can I sell a car with an outstanding personal contract purchase?

Voluntary termination

Are you looking for a car finance deal?

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

How can I obtain my settlement figure?

What your settlement figure means

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?