Can you sell a car with outstanding finance?
3 April 2023
By Joy Pearson
Within such a large industry, buying and selling cars can sometimes be complicated. If you're looking to sell your car, you may be wondering if it's possible to do so if you still owe money on it. The short and simple answer to that question is yes, you can sell a car with outstanding finance, but there are some important things you need to consider before you do so.
Firstly, it's essential to understand what outstanding finance actually means. When you purchase a car on finance, you're essentially taking out a loan to pay for the vehicle. This loan is secured against the car, meaning that if you fail to make your payments, the finance company can repossess the car to recoup their losses. If you still owe money on the car, this is referred to as 'outstanding finance'.
Now, when it comes to selling a car with outstanding finance, there are a few options available to you. One option is to pay off the finance in full before you sell the car. This will give you a clear title to the vehicle and you'll be able to sell it without any issues.
However, if you can't afford to pay off the loan in full, you may be able to sell the car with the outstanding finance. This is known as a 'settlement sale', and it involves using the proceeds of the sale to pay off the final balance. You'll need to get permission from your finance company to do this, as they will need to provide you with a settlement figure that you can use to calculate how much you need to sell the car for.
It's important to note that if you do sell a car with outstanding finance you will need to disclose this fact to the buyer. This is a legal requirement, and failure to do so could result in legal action being taken out against you. You should also be aware that selling a car with outstanding finance can make it more difficult to find a buyer, as some people may be hesitant to take on a vehicle with finance still owed.
There are varying views on whether or not it's a good idea to sell a car with outstanding finance. Some people argue that it's better to pay off the balance off in full before selling the car, as this will give you a clear title and make the process smoother. Others believe that selling a car with outstanding finance is acceptable as long as you disclose this fact to the buyer and ensure that the finance is paid off in full before the sale is completed.
Ultimately, the decision to sell a car with outstanding finance is a personal one, and it will depend on your individual circumstances. If you're considering this option, it's important to weigh up the pros and cons carefully and seek professional advice if necessary. With the right approach, it is possible to sell a car with outstanding finance, but it's essential to do so in a responsible and transparent manner.