In Partnership with Motorway
Still making payments on your PCP or HP? You can sell your car before the agreement ends. Motorway handles the finance settlement for you.
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Finance settled directly with your lender
You keep any equity, paid before collection
Yes. If you have outstanding finance on your car, you can still sell it. The one condition is that the finance has to be cleared before the car can change hands.
On a PCP or HP agreement, the finance company owns the car until the last payment lands. You are the registered keeper, not the legal owner. That is why you cannot simply hand over the keys and take the money: the ownership cannot move across while somebody else still has a claim on it.
You do not usually need to find the settlement money yourself first. Sell through a platform like Motorway and the dealer pays your lender directly. Whatever is left after the finance is cleared comes to you. Our guide to selling a car on finance goes through the paperwork in more detail.
You put your registration in and dealers bid on the car. If you like one of the offers, you accept it. At that point you ring your finance company and ask for a settlement letter, which is the exact figure needed to close the agreement. It is usually good for about 10 days.
The dealer pays your lender directly. You do not handle that money and you do not need to clear the balance in advance. If the car is worth more than you owe, the difference is sent to your bank account before the car is collected. Payment lands first, then the car goes.
If the car is worth less than the settlement figure, the sale can still go ahead, but you would need to pay the shortfall to close the gap.
On hire purchase you are paying off the whole value of the car across the term. There is no lump sum waiting at the end. Settle early and you owe what is left of the balance, so the further through the agreement you are, the smaller that figure tends to be.
PCP works differently. Your monthly payments only cover part of the car, and a large balloon payment sits at the end if you want to keep it. A PCP settlement figure includes that balloon as well as the remaining instalments and any fees, with a rebate knocked off for paying early. That is why PCP settlements are typically higher than HP settlements at the same point in the term.
Two years into a PCP, the number your lender quotes can look far bigger than expected. That is the balloon showing up. Our PCP vs HP guide compares the two properly.
It is the exact amount needed to clear your finance today. Ring your finance provider or log into your account and ask for it. Most lenders will give you the number on the spot or send a settlement letter within a day or two.
The figure covers your remaining payments, any interest and fees, and on a PCP the balloon payment too. Against that, lenders apply a rebate because you are paying early. It is typically valid for 10 to 14 days.
The number moves daily as interest accrues, so an old quote is not much use. Get a fresh one before you agree a sale, not after.
Compare what the car is worth against what you owe. Worth more than the settlement figure and you are in positive equity, and the difference is yours. Worth less and you are in negative equity, and you would need to find the gap.
Negative equity is common in the first year or two of a PCP. Cars typically lose value fastest early on, while your payments are mostly covering interest and the balance is coming down slowly. Depreciation gets ahead of you. Later in the agreement the two often move closer together, and the position can turn.
You need two numbers: a current settlement figure from your lender and a real valuation of the car. Put them side by side and you know exactly where you stand.
You have three realistic options. Pay the shortfall and close the agreement. Keep the car and keep paying until the gap closes on its own. Or, if you have paid enough in, hand it back under voluntary termination.
Which one fits depends on how big the gap is and how soon you need to move. A few hundred pounds is often worth clearing to get the sale done. Several thousand usually is not, and waiting another six months while the balance comes down may serve you better.
A dealer may offer to roll the shortfall into a new finance agreement. It makes the problem disappear on the day, but you start the next deal already owing more than the car is worth, and the same squeeze tends to return. Our car finance hub covers how the different agreements work.
The Consumer Credit Act 1974 gives you the right to end a PCP or HP agreement early once you have paid at least half of the total amount payable. On a PCP that total includes the balloon payment, so the halfway mark arrives later than people expect.
Hit that threshold and you can hand the car back and owe nothing further, as long as it is in reasonable condition for its age and mileage. This is a legal right written into the agreement, not a favour the lender grants. They cannot refuse it if you qualify.
The condition test is where costs can appear. Anything beyond fair wear and tear, such as kerbed alloys, dents or a missing service history, may be charged for. If you are in negative equity and the car has been looked after, voluntary termination can be a cleaner exit than finding a shortfall in cash.
Get competing offers from 8,000+ verified dealers. Motorway settles the finance for you.
Value Your CarIn March 2026 the FCA confirmed a £7.5bn redress scheme for motor finance. If you took out a PCP or HP agreement between 6 April 2007 and 1 November 2024, you may be owed money. The average payout has been estimated at around £829.
The claim belongs to whoever signed the original agreement, so selling the car does not hand it to the next owner. Check before you sell, while the paperwork and account details are close to hand. Our guide to the FCA compensation scheme explains who qualifies and how to check.
The finance side works the same whatever you drive, but what the car is worth depends a lot on the fuel type. Diesel values have been under pressure from clean air zones and the 2035 cut-off, which matters if you are trying to work out whether you are in positive equity. If that is you, see what to expect when you sell a diesel car.
Electric cars have moved even more sharply, and a lot of the PCP deals signed in 2021 and 2022 are now reaching their end. If you are coming off one of those agreements, our page on selling an electric car covers what is driving used EV values at the moment.
Common questions about settlement figures, negative equity, and voluntary termination.
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