Can I Sell My Car If It’s on Finance?

Updated

Feb 9, 2026 8:37 PM

Written by Nathan Cafearo

You cannot legally sell a financed car until you settle the agreement. Learn your options, costs, equity, and how upcoming FCA redress could affect your next move.

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Selling a financed car in the UK - what you need to know

If your car is on finance, you do not legally own it until the agreement is fully settled. That is the critical starting point. Under PCP and HP, the finance provider holds title to the vehicle, which means a private sale before clearing the balance risks repossession, legal action, and serious credit damage. Personal Contract Hire is stricter still - you can never sell because it is a lease, not a path to ownership.

You cannot legally sell a car on finance until the lender is fully repaid and confirms settlement in writing.

The practical route is simple in principle. Ask your lender for a settlement figure. This includes outstanding payments, interest, any fees, and in some cases an option-to-purchase fee. Once cleared, the lender issues written confirmation and removes their interest. Only then should you list the car or complete a sale. If you are upgrading, dealers often settle the finance for you as part of a part-exchange. If the car is worth more than you owe, that positive equity becomes a deposit. If it is worth less, you will need to cover the shortfall.

There is a wider backdrop. Many UK car finance agreements since 2007 involved commissions, some undisclosed. A Supreme Court judgment in 2025 clarified that high, undisclosed commissions can still render deals unfair. The FCA is finalising a redress scheme in early 2026, with complaint responses paused until 31 May 2026. If you are affected, compensation could reduce what you owe and change the economics of selling. That said, you must still follow the law today: settle first, then sell.

A standout point: trying to sell to a private buyer without disclosing or settling is treated as fraud. Protect yourself by doing it right - get the figure, settle, and keep paperwork.

Who should read this

If you are in the UK with a car on PCP, HP, or PCH and you are considering selling, upgrading, or changing finance, this guide is for you. It is especially relevant if you are unsure about your equity position, wondering whether a dealer can settle your finance in a part-exchange, or you have heard about possible commission-related refunds and want to understand how that might affect a sale. If you prefer clarity before making a commitment, you will find practical steps here - from getting a settlement figure to completing the paperwork legally.

Your viable routes

Settle the finance, then sell privately for market value.
Part-exchange - dealer settles finance directly with your lender.
Refinance or take a personal loan to clear the balance.
Keep the car until term end, then sell if you own it.
Use the PCP final payment route - pay balloon, then sell.
Consider voluntary termination if you qualify, then walk away.
PCH users - return the car at term end, no sale option.

Costs, impact, returns, and risks at a glance

Option	Upfront cost	Impact on equity	Potential returns	Key risks
Settle then sell privately	Medium to high - pay settlement	Unlocks full equity if car value exceeds settlement	Best sale price if marketed well	Price uncertainty, time to sell, admin errors
Part-exchange with dealer	Low to medium - shortfall paid if negative equity	Dealer calculates equity instantly	Fast and convenient, fewer admin steps	Lower trade-in price vs private sale
Refinance or personal loan	Varies by rate and credit score	Can convert negative equity into manageable payments	Flexibility to sell at right time	Higher interest, affordability checks
Keep until term end	Low additional cost beyond normal payments	Equity may improve if depreciation slows	Avoid rushed decisions, more options later	Depreciation may outpace balance reduction
PCP final payment then sell	High balloon payment due	Ownership transferred after balloon paid	Market sale price as owner	Balloon may exceed market value
Voluntary termination (if eligible)	Potential shortfall to reach 50% of total	Ends agreement, no car retained	Clears future payments	Condition charges, credit file marker
PCH return at end	No sale cost - return only	No equity - lease only	Clean exit if within mileage/condition	Excess wear and mileage charges

Are you eligible to proceed - and on what terms

Your path depends on your agreement type. With HP and PCP, you can settle early by requesting an up-to-date settlement figure from your finance provider. This will reflect all remaining amounts due and any fees. If your car’s market value exceeds the settlement, you have positive equity that can reduce the cost of your next car. If the value is lower, you carry negative equity that you will need to clear in cash or through finance. Dealers commonly settle finance in part-exchanges, but always verify the figures and get written confirmation that the lender has been repaid.

If you are on PCH, you cannot sell at any point - it is a lease and ownership is never transferred. For PCP customers nearing the end of term, you can pay the optional final payment to take ownership, then sell. Some customers explore voluntary termination where total payments reach 50% of the agreement value. Conditions apply and you must expect reasonable wear standards.

Kandoo can help if you choose to refinance or use a personal loan to clear the settlement. As a UK-based retail finance broker, we work with a panel of lenders so you can compare options and find a solution that fits your budget.

Step-by-step to do it right

Request a written settlement figure from your lender.
Check your car’s realistic market value today.
Calculate equity - positive or negative position.
Choose route - private sale, part-exchange, or refinance.
If private sale, clear settlement before handing over keys.
Obtain written confirmation that finance interest is removed.
Complete sale paperwork and notify DVLA immediately.
Keep all records - agreements, receipts, and lender letters.

Weighing it up - benefits and drawbacks

Aspect	Pros	Cons
Private sale after settlement	Often achieves highest price	Requires upfront funds and more admin
Part-exchange	Fast, dealer handles settlement and paperwork	Usually lower valuation than private sale
Refinancing to clear balance	Maintains mobility, spreads cost	Interest costs, affordability checks
Waiting until end of term	Avoids rushed decision, clarity on ownership	Ongoing depreciation risk
Voluntary termination	Ends payments on an unaffordable deal	Potential charges, credit file marker
PCH return	Simple exit, no ownership risk	No option to sell or access equity

Key watchpoints before you commit

Never attempt a private sale without clearing or fully disclosing the finance - that is fraud in the UK and can lead to prosecution, repossession, and long-term credit harm. Get a settlement figure that is valid for the stated period and confirm whether any fees apply. Understand your equity position by comparing the settlement with realistic valuations from multiple sources, not just a single online tool. If you are part-exchanging, ensure the dealer’s order form clearly shows the settlement amount, how it will be paid, and what happens if the figure changes. Keep every document.

There is also a regulatory dimension. The 2025 Supreme Court ruling confirmed that undisclosed, high commissions can create unfair agreements. The FCA is building a redress scheme, with complaint responses paused until 31 May 2026. If you suspect mis-selling, keep records and consider whether potential compensation could offset your balance. It may not change today’s legal requirement to settle before selling, but it could influence timing and cost.

Next steps suggestion

Get your written settlement today and compare it with trade and private sale valuations this week.

Alternative paths if selling is not ideal

Renegotiate mileage or term if eligible to reduce end costs.
Make an early part-exchange on a cheaper car to reduce payments.
Apply for a personal loan to clear negative equity, then sell.
Wait for FCA redress clarity before deciding, if mis-selling suspected.
Pursue voluntary termination if terms and costs make sense.

FAQs - straight answers

Q: Can I sell my car while it is still on finance? A: Not legally. The lender owns it until you settle and receive written confirmation removing their interest.

Q: Can a dealer sort the finance if I part-exchange? A: Yes. Dealers commonly settle directly with the lender. Any positive equity becomes a deposit. Negative equity must be repaid or refinanced.

Q: What if I am on PCH? A: You cannot sell at any time. It is a lease. You return the car at the end, subject to mileage and condition.

Q: How do I get a settlement figure? A: Contact your lender. Ask for a written, time-limited figure including all remaining payments, interest, fees, and any option-to-purchase charge.

Q: Does the 2025 Supreme Court ruling help me today? A: It may. Undisclosed commission can make agreements unfair. With the FCA’s scheme due in early 2026, potential refunds could reduce what you owe.

Q: Are complaints being handled now? A: Most motor finance complaint responses are paused until 31 May 2026 while the FCA finalises redress rules. Keep records and diarise key dates.

Q: How common is mis-selling? A: Commissions featured in most UK car finance deals, and a significant share may have been mis-sold. Average overpayment estimates suggest meaningful potential refunds for some consumers.

How Kandoo can help

Kandoo is a UK-based retail finance broker. If clearing your settlement unlocks a better outcome, we can introduce you to lenders so you can compare personal loans and finance solutions. Transparent rates, simple applications, and timely decisions help you act with confidence and keep your options open.

Important information

This guide is for general information only and is not financial or legal advice. Always check your agreement, obtain a written settlement from your lender, and consider independent advice. Finance is subject to status and affordability. Terms and conditions apply.