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I would like to borrow
£1,500
To pay back over
3.5 years

Representative Example: Borrowing £5,500 over 48 months with a representative APR of 19.8%, the amount payable would be £163 a month, with a total cost of credit of £2,283 and a total amount payable of £7,783.

Can I change a car with outstanding finance?

Car finance can feel like a big and complex topic – so it’s normal to be unsure what’s possible if you want to change your car.

With this in mind, we’ve put together a detailed answer that covers a range of possibilities, including how you can change your car – even if it’s got outstanding finance; what happens if you want to part-exchange a car that you’re still paying off, and what happens if you want to sell your car while there’s still a finance agreement in place.

How do I go about changing a car with outstanding finance?

There are a host of reasons you might need or want to change your car partway through the repayment of your finance agreement. For many people, family needs change – for others, there’s more (or less) travelling to be done with work. In some cases, you might just fancy a change.

Whatever your reason for planning a swap to another car, your outstanding loan doesn’t need to get in the way. 
You’ve got a number of options when it comes to making the change. You can go to a dealership, pick the car you want, then have the company handle the finance process for you – or you can handle the process yourself, settling your current finance and taking out a new agreement.

We’ll explain how each of these options works:

What’s involved with trading in a car with outstanding finance?

Car dealerships, even small independent ones, tend to have close links to finance companies. There’s a good chance that the salesperson or sales manager you’re dealing with will have plenty of experience with people who’d like to change their car mid-finance agreement – so you’ll generally be in good hands.

The only slight drawback with dealing with a dealership is the fact that you’ll be limited to cars that they can provide. That’s not usually a problem though – since any dealer will take your current car in part-exchange.

The company you’re dealing with will request a ‘settlement figure’ from your current finance provider – an exact amount that’s needed to pay off your loan on the day. When they have this figure, they’ll put together a deal that settles this (usually with the value of your current vehicle) and sets up a new agreement on the car you’ve picked.

In some instances, the car you own will be worth more than the outstanding finance – which is good as it will effectively mean any excess can be used as a deposit on your next car, reducing your monthly payment. That said, sometimes a finance settlement is more than the value of your car – in which case, you might need to make a cash contribution.

The beauty of changing a car with outstanding finance at a dealership is that the team there will do the work for you – and, when they do, they’ll put together a package that gets you into the car you want, dealing with finance companies on your behalf.

Can I sell my car with outstanding finance?

While changing through a dealership is the hassle-free way to change your car, it can be beneficial to handle the process yourself – even though it means a little extra work.

To begin with, you should get a settlement figure from your finance company. It takes a few minutes for a loan provider to work this out – but they should be able to do it over the phone. You should remember that this figure will only be valid for a certain period of time – after which you’ll need to request another.

When you’ve got this figure, you’ll need to look at selling your vehicle. It’s worth exploring how much similar cars are worth on the pre-owned market – and remember, you’ll probably get a little more if you sell privately like this. Dealers, traders, and car buying services are much quicker – but you might get a lower price.

If you do want to sell privately, you’ll need to get some guidance from your finance company around settling your previous loan. It’s actually illegal to sell with finance that remains outstanding – but your company will explain how it can be done so everyone is protected, and your finance is paid off immediately.

In an ideal world, your sale amount will cover your settlement figure perfectly – but this isn’t likely to be the case – so prepare yourself for making up and shortfall, or, if you’re lucky, pocketing a little bit of profit.

Since this transaction ties up your previous finance – this is now considered ‘settled’, and you’re free to explore the market – tracking a down a car that’s better suited to your current needs.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

When determining interest rates on car loans, lenders take a range of factors into account, including the size of the loan and your credit rating.

Car loans are calculated according to a number of factors, including the type of loan you take out, the term of the loan and your credit rating.

Car finance is calculated according to a number of factors, including the type of agreement you take out, your credit rating, the term of the loan and the size of deposit you pay.

You can approach lenders directly to get a car loan for a used car. However, it’s often best to use an online broker instead. This approach can save you time and help you to find the most competitive deals.

It is possible to modify a financed car – but it’s absolutely vital that you check with the company that provides the finance that it’s okay before you do. After modification, you’ll need to inform your finance company, and insurance company that work has been carried out.

If you want to sell a used car with a loan, check the details of your agreement carefully. Unless you’re the legal owner of the car, you won’t be able to sell it until you’ve paid a settlement figure.

Whether or not you can return a financed car depends on the type of agreement you have. If you’ve got a hire purchase (HP) or personal contract purchase (PCP) plan, you’re allowed to hand it back – as long as you have paid off at least 50% of the loan, including any fees and interest.

Dealerships and banks have access to some slightly different finance products. Banks can offer personal loans – and dealers can sometimes offer special promotions like 0% APR. Since you’re free to choose – you should compare all options available to you.

As well as checking your credit rating, car finance companies will need some details about the vehicle you’re planning to buy – and some information about your current employment and accommodation situation.

Settling a car finance agreement is usually just a case of paying back the amount you borrowed, plus any additional fees. If you want to settle early, you may face extra charges.