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Scrapping a car you own outright is simple. If your vehicle still has outstanding finance, it’s a little more involved — here’s what you need to know before you try.
The law says it is illegal to sell a car with finance before the full amount has been paid off. If the vehicle still has outstanding finance, it is still the lender’s property. You need to pay the finance off before proceeding with selling the vehicle and handing it over to a new owner — here at Scrapping A Car, we can help you pay your finance off to allow you to sell the vehicle legally.
There are many finance options available, but they usually fall into one of the categories below. Finance is typically used when a customer wants to purchase a vehicle without the upfront funds to pay the full amount.
The vehicle is always owned by the lender. Payments made pay for the vehicle’s depreciation, usually on a two or three year rotation.
The full amount is agreed to be paid in future, by regular payments or a lump sum. The vehicle belongs to the purchaser from when the arrangement is made.
The vehicle remains the lender’s property until conditions are met, such as payments made on time and the car properly maintained and insured.
The lender owns the vehicle until all conditions are met. At the end there are three options: pay the outstanding amount, exchange, or return the car.
The lender owns the vehicle, which is considered hired, until the loan (including an option to purchase fee) is paid in full.
Remember: the vehicle doesn’t belong to you until the finance is paid, and the lender is the legal owner until it’s settled. It’s easy to check whether a car has finance attached, as the finance company will have registered it on the HPI and Experian databases. If a vehicle is sold with unpaid finance, the company can trace the new owner and repossess the car, and the buyer could bring legal charges, in some cases for fraud.
Finish your contract by ensuring all payments are made, or
Request a settlement figure — the amount required to pay your loan in full
A settlement figure can include a break fee, admin fee and cost recovery fee
Use our online form to get a free, no-obligation quote. Once you have your quote price, you have two options.
We can arrange to pay off your settlement fee directly with the finance company. All outstanding payments are paid in full and you keep any remaining money.
You pay the difference yourself before we pay off the remaining balance, so your car is sold finance-free with no payments remaining.
Some providers may lift the encumbrance and transfer the remaining finance to a personal loan, allowing the vehicle to then be sold legally.
All finance companies are legally obliged to present you with a settlement agreement should you request one. If you cannot pay off the settlement, it is not legally possible for you to sell your car, whether privately or commercially.
If you have any questions, feel free to call us and we’ll be happy to discuss this further. Our advice is always impartial.
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