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Can I change a car with outstanding finance?

Before you can change a car that has outstanding finance payments left to pay, you will need to settle the finance. 

Settling car finance early might seem like a daunting task, but you’ve actually got a couple of options open to you and it’s not as tough as you might first think. You'll need to do a little bit of quick maths and collect some paperwork but, fear not, we’ll help you every step of the way.

There are 3 options available to you:

  1. Settle your finance agreement early by paying the settlement figure
  2. Sell your car and use the funds to settle your finance agreement
  3. Part exchange or swap your car for another

For each option in this guide, you’ll need your car’s “settlement figure”. This is essentially the total amount of money you will need to pay the lender to end your agreement with them, including any fees. Your lender is required by law to supply this to you within 12 days of requesting it, and you should always make sure to get it in writing.

Option 1: Pay the settlement figure

Early settlement is simple, but potentially quite costly depending on how far through your agreement you are. Once you have the settlement figure from your lender, simply pay that amount. Your lender will advise you on what happens after you pay the settlement figure, though it will usually end up with you becoming the legal owner of the car. 

Option 2: Sell your car to settle the outstanding finance

Selling a financed car is usually a better option than paying the settlement figure outright, since you’ll use the current market value of the car to pay all or part of the settlement figure. Be warned that some lenders will not let you sell your car privately, so check with them before you start this process. Most lenders will let you sell your car to a car dealer though, since the dealer will settle the finance for you. 

We can help too. Ready for that quick maths?

Pop the details of your car into our Sell My Car tool and we will let you know how much it’s worth. Next, take your car value and subtract your settlement figure from it. If you end up with a positive figure, that is how much money we will pay you for your car along with settling your finance! If it is negative, that is the amount you will need to pay on top of the value of your car, in order for us to settle your finance agreement. When you bring your car in to one of our stores, you will need to bring along the settlement figure letter that your lender sent to you – we'll take care of everything else.

Option 3: Swap or part exchange your car to settle the finance

Switching cars, even when you are paying for them monthly, is actually quite easy – and it doesn't matter whether you’re on a Personal Contract Purchase or Hire Purchase agreement. You’ll still need to get that finance settlement figure from your lender and make sure the V5 certificate is in your name.

You'll also need to get a valuation for your car. We make this super easy with our Sell My Car tool! Enter your registration number and a few extra details here and we will sort you out with a price in mere minutes. 

Next – take your car’s valuation and subtract the settlement figure provided to you by your lender. This is the amount of “equity” available in your car. If you end up with a positive figure, you can use this amount of money as a part exchange for your next car! If it’s negative, you’ll actually need to pay that amount of money on top of your new car’s price.

One more thing - if you are paying your current car finance by Direct Debit, it is a really good idea to check when your payments come out of your bank account, since your settlement figure will lower each time you make a payment and you don’t want to end up shorting yourself on the value of your car.

Looking to get started with a switch? Enter your current registration number here to find out how much your car is worth, then hunt down your dream car using our used car search.

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