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Car finance ›
Can you change or upgrade your car with outstanding finance?
Daniel Timblick, Senior Credit Risk Analyst, Thursday, 02 March 2023
Updated: Monday, 30 September 2024
Updated: Monday, 30 September 2024
Whether you’ve got your eye on a new car or want to change to something with lower monthly payments, having car finance on your current vehicle can make things more difficult.
Here, we look at the rules around swapping your car with outstanding finance, your options, and the legalities of selling your car. And if you need to go back to basics first, we have a guide on how car finance works to get you up to speed.
What is outstanding finance on a car?
Outstanding car finance refers to the money you owe the lender for your finance agreement. It’s the balance you still need to pay the lender after deducting any payments you’ve already made.
Until the remaining finance amount has been paid off, the lender legally owns the car. This is because the lender will purchase the car and allow you to repay it by paying monthly instalments.
Can you sell a car on finance?
Selling a car with outstanding finance isn’t as simple as taking it to a dealership or arranging a private sale. This is because you are not the car’s legal owner until you have paid the finance amount in full. Instead, you will be the car’s registered keeper.
When you take out a finance agreement, you purchase your vehicle through a car finance company. The lender will legally own the vehicle until you’ve paid off the car, along with any fees or additional payments, depending on your type of finance.
Once your agreement has finished, the lender will transfer the car into your name, and you will be the car’s legal owner. As the legal owner, you can modify or sell the vehicle as you wish.
During your agreement, if you want to sell the car, you can ask your lender for an Early Settlement Figure (ESF). This figure is the outstanding balance you can pay to end the agreement and become the car’s legal owner.
Read our full guide to learn more about settling car finance agreements early.
Can car finance be transferred to another person?
If you want to end your finance agreement, you might wonder about transferring it to someone else. But you can’t transfer car finance from one person to another, as each finance agreement is tailored to you and to the car you’re buying. It’s an agreement between you and the lender, so you can’t just switch it to another person.
Learn why you can’t do this in our guide: ‘Can you transfer car finance to another person?‘.
Whether you’ve got your eye on a new car or want to change to something with lower monthly payments, having car finance on your current vehicle can make things more difficult.
Here, we look at the rules around swapping your car with outstanding finance, your options, and the legalities of selling your car. And if you need to go back to basics first, we have a guide on how car finance works to get you up to speed.
What is outstanding finance on a car?
Outstanding car finance refers to the money you owe the lender for your finance agreement. It’s the balance you still need to pay the lender after deducting any payments you’ve already made.
Until the remaining finance amount has been paid off, the lender legally owns the car. This is because the lender will purchase the car and allow you to repay it by paying monthly instalments.
Can you sell a car on finance?
Selling a car with outstanding finance isn’t as simple as taking it to a dealership or arranging a private sale. This is because you are not the car’s legal owner until you have paid the finance amount in full. Instead, you will be the car’s registered keeper.
When you take out a finance agreement, you purchase your vehicle through a car finance company. The lender will legally own the vehicle until you’ve paid off the car, along with any fees or additional payments, depending on your type of finance.
Once your agreement has finished, the lender will transfer the car into your name, and you will be the car’s legal owner. As the legal owner, you can modify or sell the vehicle as you wish.
During your agreement, if you want to sell the car, you can ask your lender for an Early Settlement Figure (ESF). This figure is the outstanding balance you can pay to end the agreement and become the car’s legal owner.
Read our full guide to learn more about settling car finance agreements early.
Can car finance be transferred to another person?
If you want to end your finance agreement, you might wonder about transferring it to someone else. But you can’t transfer car finance from one person to another, as each finance agreement is tailored to you and to the car you’re buying. It’s an agreement between you and the lender, so you can’t just switch it to another person.
Learn why you can’t do this in our guide: ‘Can you transfer car finance to another person?‘.
Can you change a car on finance?
The exact rules for changing a car on finance vary depending on the type of finance agreement you have taken out. If you want to change your car with outstanding finance, check your contract or contact your lender to discuss your options.
Every car finance agreement is different. This means you cannot simply switch from one car to another on the same finance agreement. If you wish to change your car with outstanding finance, you first need to end your existing agreement.
Can you change a car on finance?
The exact rules for changing a car on finance vary depending on the type of finance agreement you have taken out. If you want to change your car with outstanding finance, check your contract or contact your lender to discuss your options.
Every car finance agreement is different. This means you cannot simply switch from one car to another on the same finance agreement. If you wish to change your car with outstanding finance, you first need to end your existing agreement.
How to change a car with outstanding finance
You can only change your vehicle when you have made all the necessary car finance payments. But if you want a new car now, there are 2 main options available.
How to change a car with outstanding finance
You can only change your vehicle when you have made all the necessary car finance payments. But if you want a new car now, there are 2 main options available.
1
Pay the outstanding car finance balance
When you take out an agreement with Moneybarn, you agree to a ‘Conditional Sale Agreement’. Conditional Sale (CS) finance means the finance provider legally owns your car until you have paid the finance amount in full.
One way to change your car is to make an ‘early settlement’, which is where you pay off the remainder of your car finance balance.
To do this, you’ll need to contact your lender to ask for your Early Settlement Figure. You’ll need to pay the finance company this amount to end the agreement.
When you take out an agreement with Moneybarn, you agree to a ‘Conditional Sale Agreement’. Conditional Sale (CS) finance means the finance provider legally owns your car until you have paid the finance amount in full.
One way to change your car is to make an ‘early settlement’, which is where you pay off the remainder of your car finance balance.
To do this, you’ll need to contact your lender to ask for your Early Settlement Figure. You’ll need to pay the finance company this amount to end the agreement.
If you’re a Moneybarn customer, you can access this in your My Moneybarn account.
If you’re a Moneybarn customer, you can access this in your My Moneybarn account.
Then, you can get your car valued to assess your equity. To do this, you need to subtract the Early Settlement Figure from the car’s valuation price. You could browse online adverts for cars with similar mileage and condition to yours or use online tools to calculate its approximate value. The final figure will either be positive or negative.
A negative figure means that you have negative equity. This is when your vehicle is worth less than your Early Settlement Figure.
If you have negative equity and want to part exchange your car, you’ll need to pay extra on top of trading in the car to end your current finance agreement. This extra payment covers the difference between your car’s value and what you owe the finance company.
A positive figure means you have positive equity. This is when your car is worth more than your Early Settlement Figure. As your car is valued at more than the remaining finance amount, you could settle your agreement and put the rest towards a deposit for a new car.
It’s important to remember that you only legally own the vehicle once you have settled your finance agreement with the lender. So, you must pay off the car finance agreement before selling your vehicle.
Then, you can get your car valued to assess your equity. To do this, you need to subtract the Early Settlement Figure from the car’s valuation price. You could browse online adverts for cars with similar mileage and condition to yours or use online tools to calculate its approximate value. The final figure will either be positive or negative.
A negative figure means that you have negative equity. This is when your vehicle is worth less than your Early Settlement Figure.
If you have negative equity and want to part exchange your car, you’ll need to pay extra on top of trading in the car to end your current finance agreement. This extra payment covers the difference between your car’s value and what you owe the finance company.
A positive figure means you have positive equity. This is when your car is worth more than your Early Settlement Figure. As your car is valued at more than the remaining finance amount, you could settle your agreement and put the rest towards a deposit for a new car.
It’s important to remember that you only legally own the vehicle once you have settled your finance agreement with the lender. So, you must pay off the car finance agreement before selling your vehicle.
2
Voluntary termination of your car finance agreement
2
Voluntary termination of your car finance agreement
If you want to end your car finance agreement early and are comfortable handing back the car, you can speak to your lender about voluntary termination.
Voluntary termination is one of your rights under the Consumer Credit Act 1974. This allows you to end your car finance early, provided you meet the criteria in your finance agreement.
The terms will depend on the type of finance you have. For Conditional Sale (CS), Hire Purchase (HP), and Personal Contract Purchase (PCP), these are:
- Pay half (50%) of the total amount payable – this figure will be set out in your contract
- Return the vehicle to the lender in acceptable condition (acceptable condition means there is no excessive damage, and any wear and tear falls in line with what your contract defines as normal wear and tear for a financed car)
However, this might not be the best option if you want to change cars. This is because you will hand the car back to the lender and won’t have anything to part-exchange for your next car. It’s best to speak with your lender if you are struggling to make the repayments, as they can tell you your options.
Buy your next car with Moneybarn
If you want to end your car finance agreement early and are comfortable handing back the car, you can speak to your lender about voluntary termination.
Voluntary termination is one of your rights under the Consumer Credit Act 1974. This allows you to end your car finance early, provided you meet the criteria in your finance agreement.
The terms will depend on the type of finance you have. For Conditional Sale (CS), Hire Purchase (HP), and Personal Contract Purchase (PCP), these are:
- Pay half (50%) of the total amount payable – this figure will be set out in your contract
- Return the vehicle to the lender in acceptable condition (acceptable condition means there is no excessive damage, and any wear and tear falls in line with what your contract defines as normal wear and tear for a financed car)
However, this might not be the best option if you want to change cars. This is because you will hand the car back to the lender and won’t have anything to part-exchange for your next car. It’s best to speak with your lender if you are struggling to make the repayments, as they can tell you your options.
Buy your next car with Moneybarn
Looking to upgrade or change cars? We could help! Our Conditional Sale agreement means you’ll legally own the car at the end of your agreement.
Better yet, there is no balloon payment or option to purchase fee, like PCP and HP finance. Once you make the final payment, you’ll legally own the car.
How our car finance works
We’re also specialists in offering bad credit car finance. So if you’ve been refused car finance by other lenders or you’re finding it tough to get finance, e.g. because you’re self-employed and want car finance or are looking for car finance with a CCJ, we could help.
Use our car finance calculator to see what your monthly payments could look like. Then, when you’re ready, get a quote using our quick and easy online form.
Representative 30.7% APR.
Looking to upgrade or change cars? We could help! Our Conditional Sale agreement means you’ll legally own the car at the end of your agreement.
Better yet, there is no balloon payment or option to purchase fee, like PCP and HP finance. Once you make the final payment, you’ll legally own the car.
We’re also specialists in offering bad credit car finance. So if you’ve been refused car finance by other lenders or you’re finding it tough to get finance, e.g. because you’re self-employed and want car finance or are looking for car finance with a CCJ, we could help.
Use our car finance calculator to see what your monthly payments could look like. Then, when you’re ready, get a quote using our quick and easy online form.
Representative 30.7% APR.
How our car finance works
FAQs about changing your car with outstanding finance
Can I swap my car on finance for another car?
You can’t switch your car for another one if it still has outstanding finance. You will need to end your existing finance agreement before taking out a new one for your next car.
Read ‘Can you swap finance from one car to another‘ for more information.
Can I swap my financed car for a cheaper one?
Changing your financed car for a cheaper one isn’t as simple as just trading it in and continuing to pay your current agreement. If you want to swap cars, you’ll need to pay off your existing finance agreement. Some dealers will do this for you if you want to part exchange the car, but it’s best to speak to your lender to understand the process involved.
If you can’t afford the monthly payments, you can return the vehicle to the lender and end your finance agreement early. Just remember that, with voluntary termination, you’ll need to have paid up to 50% of your total finance amount.
Can you hand back a car on finance?
If you want to return your financed car, you must have paid, or be willing to pay, up to 50% of your total finance amount. This is known as voluntary termination. If you’re struggling with payments, you can contact your lender to discuss your options.
Under the Consumer Credit Act 1974, you can voluntarily terminate your car finance, but only when you have paid 50% of the total amount payable.
Can you change your car partway through a Personal Contract Purchase (PCP) agreement?
With a car on PCP, there are 2 ways to change your car partway through. You can either end your agreement by voluntary termination (paying back up to 50% of the total amount due and returning the car), or you can continue the agreement and return the car at the end.
Can you change your car partway through a Hire Purchase (HP) agreement?
You cannot change your car partway through a Hire Purchase (HP) agreement unless you pay the Early Settlement Figure to end your agreement. You can then trade it or sell your car as you like.
Can you change your car partway through a Conditional Sale (CS) agreement?
If you want to change your car on Conditional Sale, you’ll need to request and pay the Early Settlement Figure. You’ll then become the legal owner and be able to trade in or sell the car as you wish.
FAQs about changing your car with outstanding finance
Can I swap my car on finance for another car?
You can’t switch your car for another one if it still has outstanding finance. You will need to end your existing finance agreement before taking out a new one for your next car.
Read ‘Can you swap finance from one car to another‘ for more information.
Can I swap my financed car for a cheaper one?
Changing your financed car for a cheaper one isn’t as simple as just trading it in and continuing to pay your current agreement. If you want to swap cars, you’ll need to pay off your existing finance agreement. Some dealers will do this for you if you want to part exchange the car, but it’s best to speak to your lender to understand the process involved.
If you can’t afford the monthly payments, you can return the vehicle to the lender and end your finance agreement early. Just remember that, with voluntary termination, you’ll need to have paid up to 50% of your total finance amount.
Can you hand back a car on finance?
If you want to return your financed car, you must have paid, or be willing to pay, up to 50% of your total finance amount. This is known as voluntary termination. If you’re struggling with payments, you can contact your lender to discuss your options.
Under the Consumer Credit Act 1974, you can voluntarily terminate your car finance, but only when you have paid 50% of the total amount payable.
Can you change your car partway through a Personal Contract Purchase (PCP) agreement?
With a car on PCP, there are 2 ways to change your car partway through. You can either end your agreement by voluntary termination (paying back up to 50% of the total amount due and returning the car), or you can continue the agreement and return the car at the end.
Can you change your car partway through a Hire Purchase (HP) agreement?
You cannot change your car partway through a Hire Purchase (HP) agreement unless you pay the Early Settlement Figure to end your agreement. You can then trade it or sell your car as you like.
Can you change your car partway through a Conditional Sale (CS) agreement?
If you want to change your car on Conditional Sale, you’ll need to request and pay the Early Settlement Figure. You’ll then become the legal owner and be able to trade in or sell the car as you wish.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
