How to sell a used car with outstanding finance owing on it

How to sell a used car with outstanding finance owing on it

Selling a financed used car.

Finance Settlements and Staying Within the Law.

If you want to sell your car but have money outstanding from a finance agreement, you’ll need to take some important steps to stay safe and within the law. Generally, you’re not entitled to sell your car privately without clearing the finance first, but there are a few exceptions.

Below are the methods to selling a car and steps required to complete each process:
illustration from The Used Car Guy outlining the steps required to stay legal when selling a used car with outstanding finance

Selling a Financed Car Privately

Begin by contacting your finance company and requesting a settlement figure. This is an amount of money that needs to be paid to the finance company before you are legally allowed to sell your car. The finance company are obliged to send you an early settlement offer that usually remains active for 14 days. The offer consists of the outstanding balance under the agreement minus any interest charges. This is calculated via the number of monthly instalments remaining.

Once you receive your remaining finance figure you have the right to pay off the balance and own the car outright. At this stage, you are set to sell your car privately.
Don’t have the money to pay off the vehicle?

You cannot sell the car until you own it. Your options include:

  • Borrowing from family/friends to settle the agreement
  • Obtaining a short-term bank loan
  • Using a credit card (check this article for how to avoid any interest charges)

Remember, if you have a buyer for your car the additional loan to settle the finance will be just a few days.
Another option is the ask the private car buyer to settle the finance on your behalf and pay you the difference. Be present and connect your finance rep with the car buyer. They can settle the outstanding finance on the phone via a credit/debit card or via your online account should you have one.

Note – be 100% sure the finance has been settled and you have a letter of proof prior to releasing the car to the new owner.

Selling a car to a dealership with outstanding finance

Virtually all dealers have the facility to buy your car from you with outstanding finance. The dealer will run a car check before buying the car from you and obtain the details of the finance company whom the money is owed to. The dealership will

  • Value your car
  • Make you an offer
  • Pay the finance company their dues
  • Provide you with the difference between the amount outstanding and the purchase price


Selling a car on finance to a car buying service

Although you’ll be offered a trade to below-trade price for your car a car buying service is a simple way to sell a financed car. All car buyer’s services will know if a car has money outstanding. You need to obtain your settle figure and letter and take it with you when selling your car. The car buyers service will settle the finance and pay the difference to you via a bank transfer, note – there is likely to be a fee of between £50 and £100 when selling to a car buying service.
simple image of a used car that belongs to a finance company in the UK

Negative equity

Much like pockets of the housing market, there are many used cars that hold negative equity. Simply put, negative equity is where the money outstanding on a car is greater than its value.

Ford Focus, valued at £4,250.

Finance outstanding, £5,250

Negative equity, £1,000

This means you’ll need to pay the additional £1,000 before the car is paid off and you become the legal owner.

If you are in a negative equity dilemma your best route to a sale is privately. The private sale is certain to fetch you the best price and can often be the difference between receiving money or having to pay it out.

In the above example the Ford Focus was valued at £4,250 via a local dealer. But the retail price on Autotrader is £5,600. So, should you sell your car for around £5,500 you’ll receive money rather than pay it out!

The rule of thumb with selling a financed car is to not take risks. Ensure you have a valid settlement letter. Ensure the money being used to pay the car off is cleared. Ensure you have a letter from the finance company stating they have no further interest in the vehicle and that you are the rightful and legal owner.

Used Car Guy

Learn the real value of your car

how to value my car accurately and manually with Used Car Guy

How much will you actually get for your car? Read this definitive guide.

Quick Selling Tips.

Quick Selling Tips.

Before Listing Your Used Car for Sale…

The car selling process is often a hassle. If you’re not scrubbing your car clean you’re dealing with messages from potential buyers who end up wasting your time. However, the process still needs to go as smoothly as possible, and that means you need to undertake several tasks to ensure it does. Consider the following points before you dive in at the deep end and list your car for sale.

image of someone sat in thier classic car preparing to sell it privately

Research the Car Market

Many used car sellers end up missing out on thousands because they aren’t selling their cars for what they’re worth. Obviously, if you want a quick sale, then a lower price will help you sell faster, but if you’re not in any rush, don’t settle for less. Research the market using Google and you’ll see how much your used car can go for in the current industry. It doesn’t matter if you’re selling a used Mercedes-Benz C Class or an old Ford Fiesta, you need to research the market so you know what your car is worth. Additionally, there are brilliant low cost used car traders such as Unbeatable Car who provide competitive prices.

Hire a Professional Valet Service

Unless you’re selling your car ‘as seen’, you’ll want to make sure it’s spick and span for the new owner to take off your hands. You have two choices here: you can either clean the car yourself or you can hire a professional valet to do it for you. Both options are perfectly acceptable but, by hiring a valet service, you’re going to have a much higher chance of selling your used car quickly. A valet could be the difference in making your old car look brand new.

Give It a Farewell Drive

It’s crucial you inspect the car and give it one last test drive to ensure it’s in perfect working order. If you don’t, it could come back and bite you and you may end up having to refund the buyer. To save all the hassle, take it for one last spin and make sure it’s perfect before letting it go to someone else. If there are any problems while driving, just let the buyer know and you might be able to come up with a discounted price to suit both parties.

Check Your Car One Last Time

It’s easy to miss out on little bits when selling a car, so save yourself a load of hassle by giving it one last going over before potential buyers come and view it. Make sure the wheels are nicely pumped, the interior is perfectly clean and tidy, the in-car features work, and other things like the lights and winder wipers are in good working order. The more time you spend inspecting your car, the less time you spend answering questions or a much higher chance of selling your used car quickly. If the car is in decent working order, you’re going to have no problems selling it fast.

Of course, what you do before selling your car is completely up to you. But, if you’re willing to a much higher chance of selling your used car quickly, you can be sure the process is going to be a lot smoother and less hassle.

Too Many Choices in Our Hectic Industry.

Too Many Choices in Our Hectic Industry.

Sell my car, your options.

How to sell your car quickly, or for the highest price.


Whilst garnering my motor trade skills as a teenager in the mid 1990’s there were few options for private owners to sell their car. Mainly on offer was the Autotrader publication, your local newspaper or perhaps a local car dealership where part exchange was available.

The platforms to sell your car


Twenty Years on and there are a plethora of car selling options to choose from including:

  • Car buyer’s services
  • Autotrader online
  • Car auctions
  • Motors
  • Dealerships (for those with a desired car type)
  • eBay
  • From the roadside
  • And more….

Before heading into the pros and cons of each type it’s worth noting that Autotrader now offers free car ads to anyone whose sale price is under £1,000. This is one of the ways in which the car selling giants tackle a losing market share to firms like We Want Any Car and Trusted Car Buyers. To get your free car advert visit this link.

Autotrader also recently introduced new pricing for cars between £1,000 and £10,000 and further options for vehicles over £10,000. Find out more here.

Deciding how to sell my car. A round up for the private car seller


Buying Services

I use car buyer’s services for one specific purpose; to sell my car (any car I own) that has a mechanic problem that’s uneconomical to repair. Usually, I’ll calculate the difference between their online valuation, my potential retail price and what it will cost to repair the car. When cost-effective, I tend to use We Want Any Car to sell my car fast.

As you probably know, the price offered to sell your car will be around 55% of its true retail value. If you do sell your car on to such a service your old car will end up in a BCA auction somewhere across the country (British Car Auctions also owns We Buy Any Car). It’s a nice arrangement where the cars that arrive via their buying service end up being sold as categorised vehicles in one of their many auctions across the country.) Click here to get your own online valuation


Autotrader Online

My preferred and recommend method to sell your car is Autotrader Online. Provided you price your motor correctly you are likely to sell it for a chunk more money than you would using any of the other methods listed above. I’ve got a comprehensive guide on how I sell my car (s) via their website.


Car Auctions

Always underused, car auctions are great if your car is something that car dealers want to own. So, if you have a white Vauxhall Vectra 2.2 with 130k miles on the clock this method is not recommended. But, if you should own a Volkswagen Gold 2.0 GT TDI 5 door with 20k miles, you might want to consider an auction sale. Find out more here.



Motors Online ( is the nearest comparative competitor to Autotrader but they don’t yield nearly as much site traffic and nor are you as likely to sell your car with them. If you take the private sellers route it should be with Autotrader online.


Car Dealerships

Can I sell my car to a dealership for any reasonable amount of money? Answer, probably not. The price you get will be like a buyer’s service such as We Want Any Car. However, if you own a late, low mileage car that’s in pristine condition it’s worth getting it valued at a supplying dealer. For example, should you own a Skoda Fabia that’s a couple of years old, low miles and great condition with full (franchised) service history you may have some luck selling with them. Find more information here.


Dealers and Sale or Return (SOR)

Some dealers offer to put your car up for sale on their forecourt and pay you after. The dealer has a chance to fetch retail money for your car, take a slice from the sale price and give you the difference. Hopefully I don’t need to explain why this method is such a bad idea not needless to say, you’ll be without your car for the duration, have no idea when or if they will even sell it.



Generally, I am not a fan of selling a car with eBay, with one exception. If you have a non-runner (one with major mechanic issues) eBay is often the best place. Example: I owned a 10-year-old BMW Touring Estate with 150k miles on the clock. The engine had blown up but I was still able to sell my car as a non-runner (for a surprisingly high price) via eBay. Importantly, you should declare as a non-runner and ‘sold for spares’ to safeguard yourself.



It’s worth popping this final method in as it is very effective for cars under £1,000. The risks with selling my car from the roadside are that it can be damaged/vandalised, plus you might also get your car clamped. Years ago, a roadside sale was common place but local authorities have stamped out much of this actively. Noteworthy is that some unscrupulous car dealers will use a roadside sale to sell problematic cars whilst escaping legal responsibility (acting as a private owner or using the sold as seen slogan. Of course, this is all quite illegal and I discuss it in more detail here.


Used Car Guy

13 Steps To Sell Your Car On Autotrader Like A Pro

13 Steps To Sell Your Car On Autotrader Like A Pro

Revealed: What I’ve learned From Selling Over 5,000 Cars With Autotrader In the last 20 Years! Here is everything you need to know.

How to: Sell my car, quickly, easily and for the best money.

This is the #1 Guide to selling a car privately. This information isn’t found anywhere else. It makes car selling quick, simple and very effective.

“But first…It’s quite rare to find Autotrader offering any kinds of discounts on their packages, but I have one for you. Click here and get 50% off of any Auto Trader packages if you don’t sell your car during the first campaign and need to re-book. You’ll get that offer here.


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