Selling a car with money owing on it?

10 September 2019

Selling a car with money owing on it?

Selling a car with money owing on it

Lots of people borrow money to buy a car. After all, a car loan can be a great way to help you pay for your new vehicle, and a step in the right direction when it comes to building your credit score.

But what happens if you need to sell your car before you’ve had time to completely clear your debt? Here are some questions to consider.

1. How much money do you have left owing on your car loan?

It can be easy to ‘set and forget’ a loan, and not have a clear idea of how much you have already paid off at any particular point in time. So if you are looking at selling your car, make sure you contact your lender and get a precise figure. It may turn out to be a small enough amount that it makes sense to wait a little longer to sell the car and clear the debt first.

2. How much will it cost you to pay off the loan now?

As well as asking what’s left owing on the loan, it’s important to ask for the amount required to clear and close it. There may be added fees associated with breaking a fixed-term loan or making a lump sum payment.

3. What if you decide to sell your car with money owing on it?

If there’s a big enough balance left and you’d like to sell your car as soon as possible, you’ll need to start thinking about your next steps.
If the loan is secured by something other than the vehicle itself – perhaps your house or other business assets – selling the car is relatively simple; you find a buyer, then carry on paying off what you owe on the loan. But things are a bit different when your car loan is secured against the vehicle.

  • Selling your car privately

If you’re selling to a private buyer, for example, you should disclose the fact that there is money owing on the vehicle. If you were to stop paying the loan, the lender would have the right to seize the car, even if it was owned by someone who had bought it outright from you.
Buyers can check the Personal Property Security Register to see whether there is any money owing on a vehicle.

  • Selling through a car dealer

If you’re selling because you want to upgrade your vehicle, you may find it easier to do it through a car dealer.
Many dealers will handle the process of paying off one loan and taking out another if you trade your car in for a new one. The biggest drawback here is that you may end up with more money owing as a result.

4. Talk with your lender

Lenders have different requirements when it comes to selling a car with a loan on it. Depending on your circumstances, your lender may allow the buyer to take over the remaining loan. Other times, they will let you sell the car if you agree to immediately pay off the loan with the proceeds of the sale.
Either way, it’s always a good idea to talk with your lender about your plans. You might be able to apply to restructure the agreement with your existing lender or apply to refinance it with another finance company.
Note that if you’re the buyer in this situation, you can check the Personal Property Security Register to verify who holds security over a vehicle.
Like to explore your options? Call the team at AA Finance on 0800 500 555, seven days a week between 9 am and 5 pm. We’re here to help.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.


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