Will a Car Dealer Settle my Finance? How to Sell a Vehicle Under Finance

The automotive world moves fast these days. Every year, it seems as though there’s a new evolution in the industry, bringing us brand-new models to tempt us or reinventing the tried-and-true to create new incarnations of old favourites. For those of us who keep a finger on the pulse, it can be a source of enormous temptation when new models roll out.

With so much to look forward to over the course of 12 months, perhaps you’re casting a casual eye around the dealerships of the West Midlands searching for great deals. However, it may be the case that you have a car on finance. And while you’re still paying off the finance on your existing car, these incredible deals on great new and used cars seem like they may be out your reach for the time being…or are they?

If you are thinking about selling a car with finance outstanding, then you might be wondering what your options are. Here, we’ll shine a light on the topic of settling and selling a vehicle under finance, clearing up any misunderstandings along the way.

Interior of car

Can you sell a car which is under finance?

Although the terms of your car finance deal may seem as though you’re locked in, the typical 5-year period you have to pay it off isn’t as ironclad as you might think. The short answer to the above question is: yes, you can sell your car when it’s under finance.

It’s surprisingly quick and easy, though there are things to watch out for and processes that need to be followed. It’s important to remember that even though your name is on the paperwork, the car is still owned by the lender until you complete the repayments.

What is a car finance settlement figure?

A settlement figure is simply the amount you continue to owe on the sum you have borrowed, minus the remaining interest. If you’re planning on selling the car you have and it’s on finance, then you’ll need to know this figure.

image of car salesman

Will a car dealership settle my finance?

Another short answer: yes. This is a popular process for people looking to upgrade or change their car before paying off the total outstanding finance. The VAST majority of cars which are part exchanged/sold whilst still on finance move seamlessly through this process as the dealership does all the provenance checks, values the car, obtains the settlement figure and clears the finance, A car dealership is likely to have greater experience in this process than a private seller, so are willing to take on the extra responsibility.   

Once this process is complete, the dealership either returns any surplus to the customer or uses the equity as deposit on a new transaction. So, if you’re looking to part exchange or sell a vehicle with outstanding finance – approaching a dealership is likely to be the simplest and most cost-effective option,  

How to sell your financed car: a step-by-step guide

  • Step 1: Contact your finance company

Tell your finance company that you’re considering selling your car, and ask them to send you written confirmation of the settlement figure.

business man on the phone

  • Step 2: Obtain an up-to-date valuation for your car

Once you have the settlement figure, you’ll need to know if the proceeds of selling your car will cover the outstanding finance or whether you’ll have to cover the shortfall.

You can use the Brindley Garage site to get an accurate valuation for your car. If the valuation is higher than the remaining finance, then the sale should go swimmingly, and you’ll have a surplus after everything is finalised.

  • Step 3: Prepare your car with finance for sale

Now you’ll need to be in receipt of the lender’s written settlement figure. A printout won’t suffice, so make sure it’s in writing. Once this is done, complete this pre-sale checklist to ensure you get as close to full valuation as possible:

  • V5C logbook document for proof of ownership
  • Service history
  • MOT certificate
  • Spare key to ensure you receive full valuation
  • A full valet to ensure it’s clean inside and out
  • Fix any minor repairs like scratches and surface damage

man working

  • Step 4: Book an appointment to complete the sale

Whether the buyer chooses to collect your car from your home address, or you have it delivered to a local depot, you’ll need to have all paperwork and written confirmation of your settlement figure to complete the sale.

  • Step 5: Settle the outstanding finance on your car

This next step differs depending on both your finance provider and the company buying your car. Some buyers deal with your finance company to settle the balance, while others may ask you to settle the finance independently, which is normally done over the phone or through online banking.

With the finance settled, the car is yours to sell. Depending on whether the sale value was greater than the value of outstanding finance, you’ll receive the balancing payment from your car buyer after completing the sale.

At Brindley Garages, we’re committed to bringing our customers across the West Midlands the very best deals on our incredible range of new and used vehicles. If you have any questions about Motor Vehicle Finance come and join us for a coffee and we’ll help you to find the right car and finance package. Speak to us today using our online contact form.

Added: 05 February 2020

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