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Can I sell a car on PCP finance?

Selling a car on PCP finance is entirely possible, but it requires careful planning and a clear understanding of how your agreement works. Whether you are looking to part exchange your vehicle or sell it outright, the key requirement is that the outstanding finance must be settled before ownership can legally transfer to a new buyer.

PCP (Personal Contract Purchase) is one of the most popular car finance options in the UK, and many drivers consider selling before the agreement ends. Below, we explain exactly how it works and what steps you need to take.

How does PCP Financing Work?

PCP finance allows you to spread the cost of a vehicle through fixed monthly payments, typically over two to four years. These payments mainly cover the vehicle’s depreciation, along with interest and part of the car’s value.

At the end of the agreement, you usually have three options: return the vehicle, pay the final balloon payment to own it outright, or use any available equity as a deposit towards a new car. Because the finance company owns the vehicle until the balloon payment is made, you cannot sell it without settling the outstanding balance first.

Who Owns the Car During a PCP Agreement?

Under a PCP agreement, the finance company is the legal owner of the car until the finance is fully repaid. This means you cannot legally sell the vehicle without clearing the finance first.

However, dealerships can help manage this process. If you are part exchanging or selling to a dealer, they can usually settle the finance directly with the lender on your behalf.

How to Sell a Car on PCP Finance

Step 1 – Request a Settlement Figure

The first step is to request a settlement figure from your finance provider. This document shows the exact amount required to clear your finance and take full ownership of the vehicle. By law, finance companies must provide this within 12 days, although many respond sooner.

Settlement figures are usually valid for around 10 days, so timing is important.

Step 2 – Check Your Equity Position

Before selling, you need to understand whether you are in positive or negative equity. If your vehicle is worth more than the settlement figure, you are in positive equity and can use the difference as a deposit or receive it as payment. If the car is worth less than the settlement amount, you are in negative equity and must pay the shortfall before completing the sale.

Step 3 – Choose How to Sell

Selling to a dealership is often the simplest option. The dealer can value your car, settle the finance directly and handle the paperwork. If selling privately, you must ensure the finance is cleared before ownership transfers, as selling a car with outstanding finance without disclosure is illegal.

What Is Negative Equity and How Can You Avoid It?

Negative equity occurs when the remaining finance balance exceeds the car’s current market value. This is common early in PCP agreements due to vehicle depreciation.

You can reduce the risk of negative equity by sticking to your agreed mileage limit, maintaining the vehicle properly, and keeping it in good cosmetic condition. Regular servicing also helps protect the vehicle’s resale value.

Can You End a PCP Agreement Early?

Some PCP agreements allow voluntary termination once you have repaid 50% of the total finance amount. This option lets you return the car and end the agreement early, provided the vehicle is in acceptable condition and within the agreed mileage allowance.

It is always advisable to check your individual finance contract before proceeding.

Selling Your PCP Car to a Dealership

Selling to a dealership offers a streamlined and secure process. The dealership will obtain the settlement figure, pay the finance company directly, and transfer any positive equity to you or apply it towards another vehicle. This reduces risk and removes the complexity often associated with private sales.

Thinking About Selling Your Car on PCP Finance?

Selling a car on PCP finance is straightforward when you understand your settlement figure and equity position. Whether you are looking to part exchange or sell outright, seeking professional guidance can make the process smooth and stress-free.

If you are considering selling your car on PCP finance, contact Prestige Cars Kent today for a valuation and expert advice on your next steps.

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