Yes, you can sell a car that is on finance. But the outstanding balance must be settled before ownership can transfer to the buyer. This applies whether you are on a PCP deal or HP agreement.
Until the finance is paid off, the finance company technically owns the car (or has a legal claim on it). That means you cannot sell it without settling the debt first. The good news is that Brumble's recommended partner can handle the settlement for you as part of the sale, unless you are in negative equity.
Looking to sell? Sell your car via Brumble using our recommended partner. They handle outstanding finance as part of the sale.
The process for selling a financed car depends on the type of agreement you have. Here is how each one works.
| Finance Type | Do You Own the Car? | Can You Sell? | Key Detail |
|---|---|---|---|
| PCP (Personal Contract Purchase) | Not until the final balloon payment | Yes - dealers will often buy the car and settle the finance themselves | Positive or negative equity depends on car value vs settlement figure |
| HP (Hire Purchase) | Not until the final instalment | Yes - dealers will often buy the car and settle the finance themselves | You pay down the full value, so there is no balloon payment at the end |
| Personal loan | Yes, from day one | Yes, freely | The loan is not secured against the car, but you still owe the balance |
PCP is the most common type of car finance in the UK. With a PCP deal, you do not own the car until you make the final balloon payment at the end of the agreement. If you want to sell your PCP car before the end, you need a settlement figure from the finance company.
If the car is worth more than the settlement figure, you are in positive equity and you keep the difference. If the car is worth less than the settlement figure, that is negative equity, and you would need to cover the shortfall. Many online car buying services will settle the PCP directly with the finance company as part of the sale.
HP works similarly to PCP, but there is no large balloon payment at the end. Instead, you pay equal monthly instalments that cover the full value of the car. You do not own the car until the final payment is made.
To sell a car on HP, you need a settlement figure and the finance must be cleared before or during the sale. Because you are paying down the full value of the car from the start rather than deferring a chunk to the end, the way equity builds up can differ from PCP. Whether you are in positive or negative equity depends on how far through the agreement you are and how the car's value has held up.
If you bought your car with a personal loan, the car is legally yours from day one. The loan is unsecured, so it is not tied to the vehicle. You can sell the car freely, but you still owe the loan balance to the lender. You could use the sale proceeds to pay off the loan, or continue paying it separately.
If you are considering new finance for your next car, you can compare car finance deals via Brumble.
You cannot legally sell a car that has outstanding finance to a buyer without settling the finance first. Under the Consumer Credit Act 1974, the finance company retains legal ownership (or an interest in the vehicle) until the agreement is fully paid. Selling without settling could be considered fraud.
However, this does not mean you are stuck. You can sell a financed car legally by settling the finance as part of the sale. Most online car buying services and many dealerships do this routinely - they pay the finance company directly from the sale price, and any remaining equity comes to you. The key is that the finance must be cleared before or at the point of sale, not after.
If you are buying a used car, it is worth running a vehicle history check to confirm there is no outstanding finance on it. If a previous owner sold the car without settling the finance, the finance company could still have a legal claim on it, even if you bought it in good faith.
The 50% rule, also known as voluntary termination, is a legal right under Section 99 of the Consumer Credit Act 1974. It allows you to hand back a car on HP or PCP once you have repaid at least 50% of the total amount payable, including any balloon payment on a PCP deal.
This is different from selling your car. With voluntary termination, you return the car to the finance company and walk away from the agreement with nothing more to pay, provided the car is in reasonable condition. You do not receive any money from it, but you also do not owe anything further.
The 50% threshold is based on the total amount payable under your agreement, not just the original car price. For a PCP deal, the total amount payable includes the balloon payment, so 50% of a PCP agreement can be a large sum. For HP, where there is no balloon, the 50% point usually arrives around the midway point of the term.
If you have not yet reached the 50% mark, you can make a lump-sum payment to bring yourself up to it and then terminate. Check your finance agreement for the exact total amount payable figure, or contact your finance company to confirm how much you have paid so far.
| Option | You get money? | Condition requirements | Best when |
|---|---|---|---|
| Sell via a dealer or car buying service | Yes - you keep any positive equity | No formal condition inspection | Your car is worth more than the settlement figure |
| Voluntary termination (50% rule) | No - you simply walk away | Car must be in reasonable condition | Your car is in negative equity and you have paid at least 50% |
If your car is worth more than the settlement figure, selling is almost always the better option because you keep the difference. Voluntary termination makes more sense when you are in negative equity - it lets you walk away without having to pay the shortfall out of pocket.
Selling is not the only way to exit a car finance agreement. Depending on your situation, one of these options may suit you better.
Sell the car and settle the finance This is usually the best option if your car is in positive equity. An online car buying service can handle the settlement for you. Sell your car via Brumble to get competing offers from verified dealers.
Voluntary termination (the 50% rule) If you have repaid at least 50% of the total amount payable, you can hand the car back and walk away. You will not receive any money, but you will not owe anything further provided the car is in reasonable condition.
Part-exchange at a dealer If you are buying another car, many dealers will settle your existing finance and put any equity towards the new deal. This can be the simplest option if you are replacing the car straight away.
Early settlement You can pay the settlement figure at any time to clear the finance and take full ownership. This makes sense if you want to keep the car but get rid of the monthly payments, or if you plan to sell privately afterwards.
Wait until the end of the agreement If none of the above work, you can simply continue making payments until the agreement ends. With HP, you will own the car outright. With PCP, you will choose whether to pay the balloon, hand the car back, or use any equity towards a new deal.
If you are struggling with payments, contact your finance company as soon as possible. They may be able to restructure the agreement or offer a temporary payment plan. For free, confidential debt advice, you can contact StepChange or MoneyHelper.
A settlement figure is the total amount you need to pay to close your finance agreement today. It is usually less than the remaining monthly payments added together, because you save on future interest.
To get your settlement figure, contact your finance company and ask for one. You have a legal right to request this under the Consumer Credit Act 1974. Most companies provide it within a few days. If you sell your car via Brumble's recommended partner, they will get the settlement figure for you as part of the process, so you do not need to do it separately.
Once you have your settlement figure, compare it to your car's current value. If the car is worth more, you are in positive equity. If it is worth less, you have negative equity.
Negative equity means your car's current value is less than the outstanding finance balance. This is more common with PCP agreements, especially in the first year or two when depreciation is steepest.
If you sell through an online car buying service, the sale price goes towards the settlement, but you would need to pay the difference out of pocket. In some cases, a lender may allow the shortfall to be added to a new finance agreement if you are buying another car. However, not all lenders offer this, especially if you are moving from one lender to another. It is also worth being cautious - carrying debt forward means you start your next agreement already owing more than the car is worth.
It could be worth getting your settlement figure and a valuation before deciding, so you know exactly where you stand. You might find that waiting a few months changes the picture if your car's value is close to the settlement amount.
If you are in negative equity and have paid at least 50% of the total amount payable, voluntary termination may be a better route than selling at a loss. See the 50% rule section above for how this works.
If you sell via Brumble's recommended partner, they will get your settlement figure for you and handle the finance as part of the sale. If you would rather do it yourself first, contact your finance company directly - you have a legal right to this figure under the Consumer Credit Act 1974.
Selling a financed car is straightforward once you know the steps. Here is the process from start to finish.
Get your settlement figure Contact your finance company or let the car buying service do this for you. This tells you exactly how much you need to pay to close the agreement.
Get a valuation or offers for your car You can sell your car via Brumble's recommended partner to get competing offers from verified dealers.
Compare the two numbers If the car is worth more than the settlement, you are in positive equity and will receive the difference.
Accept an offer The buyer or car buying service settles the finance directly with the finance company on your behalf.
Receive your equity or pay the shortfall Any positive equity is paid to you. If there is negative equity, you pay the difference to cover the shortfall.
Finance closed and car transferred The finance company confirms the agreement is closed, and the DVLA is notified so the car transfers to the new owner.
For a wider look at all the ways to sell, including private sales and part exchange, read our guide to selling your car online.
Get competing offers from verified dealers. Free to list, no sale, no fee.
Sell Your Car via BrumbleIf you are selling a financed car to buy something different, it is worth thinking about the next step before you commit. Any positive equity from the sale can go towards a deposit on your next car, which could help you get a better finance rate.
Before you buy, run a vehicle history check on any used car you are considering. This confirms the car has no outstanding finance, has not been written off, and has not been reported stolen. If you are looking at used car finance, you can compare deals via Brumble with a free soft search that will not affect your credit score.
You will also need to arrange car insurance on your new vehicle before you drive it away. Comparing quotes from multiple providers is the best way to find a competitive price.
Yes, you can sell a car on PCP. You will need a settlement figure from your finance provider. If the car is worth more than the settlement, you keep the difference. If it is worth less, you will need to pay the shortfall.
Yes, but the finance must be settled before or as part of the sale. Many online car buying services handle this for you by paying the finance company directly from the sale price.
It is illegal to sell a car without settling the outstanding finance first. The finance company retains a legal interest in the vehicle until the agreement is fully paid. However, you can sell legally by settling the finance as part of the sale, which most car buying services and dealerships handle routinely.
The 50% rule is your legal right to voluntary termination under Section 99 of the Consumer Credit Act 1974. Once you have repaid at least 50% of the total amount payable on a HP or PCP agreement, you can hand the car back and walk away with nothing more to pay, provided the car is in reasonable condition. You will not receive any money, but you will not owe the remaining balance either.
You have two routes. Within the first 14 days of signing, you have a legal right to withdraw under the cooling-off period - you return the car and repay what you have borrowed plus any interest. After 14 days, you can use voluntary termination once you have paid at least 50% of the total amount payable. Outside of these, you would need to settle the finance in full or sell the car to clear the balance.
No - the finance must be settled before or at the point of sale, not afterwards. The finance company has a legal interest in the car until the agreement is fully paid. When you sell through a dealer or car buying service, they typically settle the finance directly with the lender as part of the transaction, so it all happens in one process.
No, not without settling the finance first. The finance company owns the car (or has a legal claim on it) until the agreement is fully paid. Scrapping a financed car without their permission would be a breach of contract. If your car is damaged or not worth repairing, contact your finance company to discuss your options - they may agree to a settlement based on the car's scrap value.
Contact your finance company and ask for a settlement figure. They are required to provide this under the Consumer Credit Act 1974. It shows the total amount needed to close the agreement today.
Negative equity means your car is currently worth less than the outstanding finance balance. If you sell, you would need to cover the difference between the sale price and the settlement figure.
It is possible but more complicated. The finance must be settled before ownership can legally transfer. Most private buyers are wary of purchasing a car with outstanding finance, so selling through an online car buying service that handles the settlement is usually simpler.
Free to list, no sale, no fee. Get competing offers from verified dealers, with outstanding finance handled for you.
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