Sometimes circumstances change. Maybe the loan repayments are too much. Or you just fell out of love with your wheels and started dreaming about a newer, better model. Whatever the reason is, when you want to sell your car and it’s under finance, you’ll have to pause for thought. That’s because the car’s not yours. It technically belongs to the finance company.

Although the name on the contract is yours, full ownership of the car doesn’t transfer to you until you’ve paid the lender in full. It’s still possible to sell your car – even if it’s not technically yours. You’ll just need to take a few more steps to make the sale.

Get the details of your car finance

If you really want to be rid of your wheels, and the loan that made them yours, you’ll need to get in touch with the lender. This is so you can find out what the settlement figure for clearing the loan is. Usually, additional charges like admin costs and early repayment fees are owed. Still, the settlement cost is usually less than continuing the monthly payments to the end of the contract.

This settlement fee needs to be paid before you sell the car to someone else. It’s against the law to sell a car that you still owe money on without telling the buyer. That’s because the finance company can choose to repossess the vehicle if you don’t repay your debt. Bad news for the buyer.

If you bought your car with a personal loan instead of car finance, there’s no need to contact your bank. The car is yours. You still need to pay back the loan whether you keep, sell or write the car off. Paying your loan early with one lump sum from the sale of your car could attract additional fees. Check the fine print of the personal loan contract to see how much they might be.

Research options for selling your car while under finance

Once you know what the settlement figure is for your car or personal loan, it’s time to get online for a little research. You’ll need to find out the market value for your car. The best-case scenario is that the market value is way above the settlement cost. But that’s not always the case.

Car depreciation, how many miles you’ve done and how well you’ve taken care of your wheels will all impact your car’s value. If your car is worth more, there are a few more steps to take before you can sell her. If your car is worth less than the settlement figure, don’t despair. There are other options than selling your car while still under finance.

Of course, you can keep your dreams as dreams for now and continue paying off your car finance. If you’re close to the end of your contract, this is a reasonable option. You can always sell your car later. However, if you are having trouble with car repayments there are other options too.

If you’re halfway or more through the contract’s repayment period, you can cancel it and return the car. This is known as voluntary termination and shouldn’t affect your credit rating. But isn’t meant as a get-out clause to simply switch cars early either.

Voluntary surrender means returning the car, regardless of how much you’ve paid. This will impact your credit rating and have the finance company chasing you for years to come.

Selling your car to a dealer

When you know your car’s settlement figure and market value, you can make an informed decision about selling. If you still do want to sell, a private sale will generally get you a higher price. However, to do that, you’ll need to pay the settlement before advertising.

Of course, you can still sell your car to a dealer and get a good price. You’ll need to make sure you have the very latest settlement figure from the finance company and be ready to negotiate too. Dealers need to have a margin for resale, so you won’t be able to get as much if you sell your car online privately.

Selling your car to a dealer when it is under finance is a little different to making a private sale. The dealer will want to know the settlement fee for the car you’re hoping to trade. If this is the same or less than the agreed value, they may pay this directly to the lender on your behalf. Any excess can be used as a deposit on the new wheels.

Although it’s illegal to simply sell your car while still under finance, there are ways to end a finance contract early. You can stay on the right side of the law and credit rating companies too. Make sure you get the information you need so you can consider your options thoroughly. Once you’re armed with the knowledge, you can sell your car to a dealer, privately or decide to stick with your wheels for a little longer. There is no right or wrong decision, but there is a right way to sell your car when it’s still under finance.