Selling or trading a car with finance?

PiKe · 3 May 2019 at 16:45

I am currently paying monthly for a car until March 2021, its on a 0% finance deal and the car is mine at the end of the term.

What happens if I need to free up cash before the end of the term, I assume any outstanding finance must be cleared to make the car legally mine before I am able to sell it? What would be the most cost effective way of doing this?

Similarly, if I went back to the same dealer, would I be able to trade in the car at that point for a different model?

Hades · 3 May 2019 at 17:08

If trading the car in or selling to a dealer then the dealer will usually arrange to clear the finance. If you just want to sell it privately then you'll need to borrow the money from somewhere to pay the finance first. Also check to make sure you aren't going to have early termination penalties.

paradigm · 3 May 2019 at 17:15

Hades said:
If trading the car in or selling to a dealer then the dealer will usually arrange to clear the finance. If you just want to sell it privately then you'll need to borrow the money from somewhere to pay the finance first. Also check to make sure you aren't going to have early termination penalties.

Whilst this is technically true, the buyer can simply pay directly to the finance company to clear the balance, and pay you any remaining (if any) difference between the settlement and the selling price.

Hades · 3 May 2019 at 17:21

paradigm said:
Whilst this is technically true, the buyer can simply pay directly to the finance company to clear the balance, and pay you any remaining (if any) difference between the settlement and the selling price.

True. It might put some buyers off though, even though it would be OK.

VTR · 3 May 2019 at 17:59

paradigm said:
Whilst this is technically true, the buyer can simply pay directly to the finance company to clear the balance, and pay you any remaining (if any) difference between the settlement and the selling price.

Some will only accept payment from the person who's name the finance is under, as was the case with the last car I sold with some finance remaining. I had to pay using a debit card / bank account in my name, they would not accept it from anyone else.

Nasher · 3 May 2019 at 18:19

For a dealer there probably isn't an issue. Most private buyers won't go near a car with finance on it though.

PiKe · 3 May 2019 at 19:22

WBAC has offered £10k and would settle finance, seems reasonable as they aren't going for much more on eBay.

Type_R · 4 May 2019 at 16:47

paradigm said:
Whilst this is technically true, the buyer can simply pay directly to the finance company to clear the balance, and pay you any remaining (if any) difference between the settlement and the selling price.

Be very careful of this. If I chose to pay for your finance on your car....once the finance is cleared it is still your car until you transfer ownership to myself (which you cannot do until the finance has cleared). I was going to buy my M3 privately this way but BMW told me there was no way they could guarantee that the seller wouldn't just tell me to do one once I had settled their £45k finance.

It is amazing that there is not a simple, legal way of doing this without exposing the buyer to potentially losing a lot of money!