You cannot sell a car on finance while it is on an active Hire Purchase (HP) or Personal Contract Plan (PCP). This is because the lender or the car dealer remains the legal owner of the car unless you clear the dues.
According to Citizen Information, “You cannot legally sell an item bought through Hire Purchase until the agreement has been paid off.” However, if you take a personal loan to buy a car, you can sell it as you own the vehicle outright. But you still need to clear the personal loan debt.
How can I legally sell a car on finance?
It is hard to sell a car on finance. However, if you must, then the following steps may help:
- Step 1- Contact the respective finance company
- Step 2- Request an up-to-date settlement figure
- Step 3- Provide clarity on how you will clear the finance
- Step 4- Sell or part-exchange the car through an approved process
- Step 5- Ensure you clear the dues before the transfer of ownership
Can my credit history affect the decision of selling a vehicle on finance?
No, your credit history usually does not prevent you from selling a car on finance. However, it does not remove the financial and legal obligations you share under the car finance Ireland for bad credit agreement. You must request a settlement figure and ask the creditor before selling or part-exchanging the car.
You are liable for the outstanding balance, any arrears, interest or fees, and any shortfall if the car’s sale value is lower than the settlement figure. The lender may pursue you for the debt or repossess the vehicle legally. Alternatively, the buyer could also lose the car because outstanding finance can remain attached to it.
A bad credit score may make refinancing or covering a shortfall more difficult and could worsen if you miss further payments. So, arrange the sale directly with the lender and obtain written confirmation that the finance has been cleared.
What happens if I sell a car on finance with an outstanding balance?
If you sell a car on finance with an outstanding balance, the finance company could demand immediate repayment and may pursue you for the outstanding balance. They may even repossess the vehicle as they are the legal owner unless you clear the dues.
Therefore, you must contact the lender and request a settlement figure. Moreover, any shortfall between the sale price and the settlement figure must be paid by you.
Can you be jailed for selling a car on finance?
Yes, you may go to jail for selling a car on finance. This is especially when you do so with the main intent of fraud or deception. This is because hiding the finance agreement from the buyer is a criminal offence. Therefore, you may be imprisoned or face a court conviction.
Is it possible to clear the Hire Purchase agreement costs early?
Yes, you can clear the Hire Purchase agreement early by requesting a settlement figure from your car finance dealer or the lender. You can repay the outstanding balance plus any option-to-purchase fee to get immediate ownership of the vehicle. In some cases, you may get a discount on future interest; however, you still must pay the settlement charges.
Alternatively, according to the Consumer Credit Act of 1995, if you have paid at least 50% of the total hire purchase dues, you can return the vehicle and walk away without paying anything extra. However, the car should be in good condition, and you must pay the difference to reach the 50% threshold.
What are the rules to sell a car on personal loan, HP or PCP car finance?
Buying a car through a personal loan, Hire Purchase or Personal Contract Purchase functions differently. Hence, the rules may differ.
| Finance type | Ownership | Can you sell it? | Process |
| Hire Purchase | Finance company until the final payment | Not without the permission or settlement | Contact the car finance lender or dealer and arrange a settlement |
| Personal Contract Purchase (PCP) | Finance company until the balloon payment | Not without the permission or settlement | Contact the lender before selling or part-exchanging |
| Personal loan | You own the car from the beginning | Usually, yes | Sell the car and repay the dues |
How to sell a car on Hire Purchase agreement?
Make regular payments on the hire purchase agreement, and the car finance provider remains the legal owner until you clear the dues. You generally cannot sell the car before that as you are not the legal owner. You can legally sell it only after you legally own the vehicle by paying the dues and completion fee (if any)
Here is how to sell a car on a hire purchase agreement:
- Step 1- Get a settlement figure
- Step 2- Understand the date until which the figure is valid
- Step3- Know an early settlement charge and look for a rebate (if any)
- Step 4- Get instructions for selling a car from an expert dealer or lender
- Step 5- Confirm the ownership
How to sell a car on a PCP agreement?
A Personal Contract Purchase usually involves an initial deposit, monthly payments according to a fixed contract term and a final balloon payment. There are restrictions on mileage and vehicle modifications under a PCP agreement. You do not own the car unless you repay the full dues, including the balloon payment.
You should contact the lender before selling the car. The lender may offer a settlement figure and help you know whether a dealer may help sell it.
How to sell a car on a personal loan agreement?
An unsecured personal loan is different from HP or PCP. If you used a personal loan from a bank, lender, or credit union to buy the car, you usually own the vehicle from the start.
You may therefore sell the car. However:
- The personal loan does not automatically disappear from the credit report.
- You are responsible for the monthly repayments.
- The lender may not claim the vehicle itself, depending on the agreement.
- You can use the sale proceeds to repay some or all the balance.
- Always check whether early repayment affects the total amount due.
According to CCPC experts, “ A person who owns the car from the beginning of the agreement may sell it legally. However, they must pay the loan dues.”
Bottom line
So, you may struggle to sell a car if on a Hire Purchase or Personal Contract Purchase agreement. This is because the car finance provider or the dealer is the legal owner of the car unless you clear the dues. Therefore, you cannot sell it without discussing it with the lender and reaching a settlement figure plus any fees.
Alternatively, you are a legal owner of the vehicle from the beginning on a personal loan agreement. Therefore, you can sell the car whenever you want to. You can even use the sum to repay the remaining loan dues.
Erin Delaney is a financial writer and content strategist with strong hold on personal finance and lending related topics. She is well aware of the fact that talking about money or loans can be stressful for borrowers. To help them make informed financial decisions, she has dedicated her 10 years of her career in making complex topics like loans, bad credit, etc., easy to understand for them.
Her speciality is to write clear, informative and reader-friendly content. She keeps herself updated with the latest trends happening in the lending industry to deliver information that is useful for the borrowers.
