Selling a PCP car

Ending your finance early when circumstances change or you want a different vehicle: the guide to selling a PCP car

BuyaCar team
Jun 30, 2018

The low repayments of Personal Contract Purchase (PCP) have made it the most popular type of car finance in Britain. Millions of cars on the road today are being paid for in monthly instalments, by owners who like the affordability and flexibility of PCP finance.

While many owners make their repayments as planned and then return or buy the car at the end of the agreement, there are plenty of owners who find that they need to sell the car early, perhaps to upgrade to a different model, or if payments are hard to meet.

Until a PCP agreement is settled, the car belongs to the lender, so you can’t simply advertise your vehicle and sell it whenever you like. This remains the case at the end of the agreement: until you have made the optional final payment to buy the car, it’s not yours to sell.

However, you can normally sell your car with the agreement of your lender. Alternatively, you could part-exchange the vehicle for another one. The money from the sale or part-exchange goes to the lender to repay what’s owed, and there’s often an additional bill if the proceeds don’t cover all of the debt. In some cases where the car is worth more than the debt, you can be left with some money, which many buyers use towards their next car.

We’ve set out some of the most common options below, with advice on selling your car during or at the end of your agreement. Click on the situation that’s relevant to you to jump straight to the information.

Selling your PCP car before the end of the agreement

Ending your PCP agreement early can be beneficial in the right circumstances. You may be able to reduce your monthly payments, change to a more suitable car, or upgrade to a different model that you like the look of. You’ll usually avoid paying most of the remaining interest.

However, it may be poor value, as you’ll have to ensure that the lender is repaid everything that’s owed. This can require you to raid your savings or go into more debt.

Here are three ways to sell your car during the agreement

Selling a PCP car by part-exchanging it

Car retailers deal with part-exchange PCP cars daily, so you are almost guaranteed a smooth transaction if you’re looking to trade your car in for another one. You can do this at any time during the finance agreement, but it won’t always be affordable, as the value of the car decreases over time.

You’ll need to request a settlement figure from your lender. This is the amount that you’ll need to pay to end the agreement early, and includes all of the money still owed, and often

Towards the end of PCP agreements, cars are often worth more than the settlement figure. In this case, you should be able to part-exchange your car for a different one without too much trouble. Your finance will be settled by the retailer you’re buying your next car from (such as BuyaCar) and any surplus can either be returned to you or put towards the finance on your next car.

When the settlement figure is higher than the value of the car, you will have to make up the difference. This can be a one-off payment to the lender. Alternatively, you may be able to take out negative equity finance, where the settlement fee is added to the finance on your next car. Your monthly payments then cover both costs.

Selling a PCP car to a car-buying company

Once you have your settlement fee, you may want to get a quote from a car-buying company to see how much they will pay for the vehicle you’re hoping to sell, particularly if you think it will be more than you can get in part-exchange.

Your valuation will help you calculate whether selling your car is affordable. Make sure you take into account any damage, which some firms are quick to use as a reason to cut the payout.

A valuation that’s higher than the settlement fee should leave you with surplus cash, but it’s common for your car to be worth less than the settlement fee, particularly when you’re closer to the start of your agreement, as new and used cars tend to lose value fastest in the months after they have been bought.

You’ll need the agreement of your lender to sell the car. The car-buying company will usually pay the lender what is owed directly. If there’s a shortfall, you’ll normally pay the car buying company the difference between the car’s value and the settlement fee.

Selling a PCP car privately

Selling privately will often raise more money than trading-in or selling to a company, but you’ll have to manage the process yourself.

The process is very similar to those above. Once you have the agreement of your lender, you can sell to a private buyer who will typically pay the lender directly. You’ll need to make up any shortfall to ensure that the lender receives the full settlement fee, before the buyer gets confirmation that the finance has been settled and that they are the new owner.

If you sell the car for more than the settlement fee, you will be able to pocket the difference.


Selling your PCP car at the end of the agreement

Many drivers with PCP finance don’t even consider selling their car, as the alternatives are much easier. Some return the car to the finance company. Others decide to buy the car and pay the lump sum that was fixed at the start of the agreement.

Another popular option is to trade the car in. Because vehicles are often worth more than the lump sum required to buy them, this can release money to put towards the deposit on another car. In this situation, selling the car with the agreement of your lender can work well too, as you’re likely to end up with some of your money back in your pocket.

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