Can you change your car with outstanding finance?

When you take out an agreement with Moneybarn, you agree to a ‘Conditional Sale Agreement’. Conditional Sale finance means the finance provider legally owns your car until you have paid the finance amount in full.

One way of changing your car is by paying off the remainder of your car finance balance by making an ‘early settlement’.

To do this, you’ll need to contact your lender to ask for your early settlement figure. This is the amount you’ll need to pay to the finance company to end the agreement. Then you can get your car valued to assess your equity.

Calculating your equity is straightforward. To do this, you need to subtract the early settlement figure from the car’s valuation price. 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.

When you have negative equity, you may want to wait until your settlement figure is as close to the car’s valuation price as possible. This is to ensure that you’re not making too much of a loss on your vehicle.

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.