If you have seen the car of your dreams but can’t afford to pay for it in one lump sum, you may decide to look into car finance solutions. An increasing number of buyers are using finance schemes to purchase new and used vehicles – but what happens if you want to sell up before you’ve settled all payments? Let’s delve deeper into this issue.
There are many reasons why you might want to sell. Perhaps something else has caught your eye or perhaps you are struggling financially. Whatever the case, you can’t simply flog a car with outstanding hire purchase finance because the lender is still the legal owner of the car until the finance agreement is settled. Doing so is against the law and could land you in serious trouble.
If you want to end a contracted finance agreement, don’t just stop paying instalments and hope for the best. Instead, call the finance company and ask for a settlement figure. This will include everything you need to pay in order to become the official owner of the car and sell it on to a third party. The total figure is likely to include a hefty early exit fee which could leave you in negative equity. This means that the car is worth less than the amount you are being charged.
Things happen in life which may make it difficult to pay off instalments. If you want to return the car and release yourself of financial responsibility, you can usually do so if your contract includes a ‘voluntary termination’ clause. This means you can give the car back to the lender so long as you have paid at least 50% of the total cost. Voluntary termination should not affect your credit rating.
How do you sell a car you still owe money on? Well, you might be able to get a company to pay off your finance as part of a refinancing package for your next car. If you go through the checks and are considered a good candidate for finance options, your new deal is likely include the cost of the settlement figure to pay off the existing finance along with a loan for your new vehicle.
Of course, before you enter into a new contract, be sure you can afford it and that you really want to go ahead with the deal – after all, you don’t want to be in the same situation down the line. Selling a car with a payments contract is certainly more difficult, so think about your moves carefully.
The short answer is yes. Unlike a car finance deal, the money you borrow with a personal loan is not secured against the car. The vehicle is yours from day one so you have the freedom to sell it on whenever you like. That said, if you do decide to sell up and buy something else, you still have to pay off the loan instalments to avoid falling into debt and getting a bad credit rating.As buying a used car from a professional dealer is often considered a safer option than going through a private seller, you may be interested in the wide array of top-quality vehicles from Carwise. Located at Harlow, Maidstone and Dunstable, you can browse a wide range of makes and models and benefit from a host of after sales services.