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Changing your car when you have outstanding finance

Trading in your vehicle part-way through the contract is more common than you’d think, and can be done at pretty much any time, even if you owe outstanding finance.

Believe it or not, many people opt to change their cars part-way through their lease.

When it comes to trading in financed cars part way through the leasing period there are a couple of things you’ll need to consider.

One of the most important things to consider is all of the different options available to you.

Once you have a better understanding of how the process of changing your car when you have outstanding finance works, you will be able to decide what the right option for you is.

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Settling car finance early might seem like a daunting task but it’s not as tough as you might think. We’re here to help you every step of the way – Here are your 3 options:

1. Settle your finance agreement early by paying the settlement figure

This option is nice and easy but could be costly depending on how far along you are in your finance agreement. Typically once you pay your settlement figure you will be the legal owner of the car (Your lender will explain if this is not the case). Once the car is legally yours, you can choose what you’d like to do with it; keep it, part ex it or sell it.

2. Sell your car and use the funds to settle your finance agreement -

Selling a financed car allows you to use the current value of the car to pay all or part of the settlement figure. Check with your lenders first to see if they’ll allow you to sell your financed car privately or through a dealer. Most lenders will let you sell your car to a car dealership as they can settle the finance for you.

· Step 1 - Use our free valuation tool and we'll let you know how much it’s worth.

· Step 2 - Take this valuation and subtract your settlement figure from it. If you end up with a positive figure, that's how much money you’ll be paid by the dealer along with them settling your finance. If it's negative, that's the amount you'll need to pay on top of the value of your car, in order for them to settle your finance agreement.

· Step 3 – Bring your settlement figure letter to the dealership and they will sort the rest!

3. Part exchange or swap your car for another

Switching cars can be quite easy when you are on a PCP or HP agreement. All you need is a settlement figure from your lender, VC5 log book in your name and a vehicle valuation.

Take your vehicle valuation from your settlement figure to find out how much “equity” there is on your car. If you are in positive equity, you can use this amount of money as a part exchange for your next car. If you’re in negative equity, you’ll need to pay that amount of money on top of the price of your new car.

Our top tips and advice for drivers wanting to change their car that has outstanding finance:

Get clued up on your finance contract - If you want to start a new car finance agreement, it helps to understand the contract between yourself and the lender. Is there any terms and conditions you’ll need to bear in mind before trying to sell your financed car, for example:

  • Are there any terms that you would be breaching if you chose to change your car earlier with outstanding finance?
  • Is there a penalty stated that would need to be paid?
  • Does your lease period have to be at least halfway through?

Contact your finance provider

Get in touch with your finance provider and ask if it would be possible to have a meeting or a phone call to discuss your situation with them. You may be able to come up with an agreement that you are both happy with, such as them restructuring your finance loan and spreading it over a longer period of time while combining it with a new finance loan, for your new vehicle.

If this isn’t an option, then you may want to look into companies that offer finance to motorists who already have outstanding vehicle finance.