Get a FREE Car Check

Can I buy or sell a car with outstanding finance?

finance on car

Buying or selling a car can be a complex process, and when outstanding finance is involved, it adds an extra layer of complexity. This article will explore the implications and consequences of dealers buying or selling cars with outstanding finance. We’ll explore the challenges and responsibilities on both sides of the transaction, providing valuable insights for buyers, sellers, and dealerships.

Can a dealer sell a car with outstanding finance?

In the UK, it is illegal for a dealer to sell a car with outstanding finance. The finance company will still technically own the vehicle until the balance is paid in full. If you’re planning to buy a used car, it’s essential to check that the previous owner has settled the outstanding balance and obtained the appropriate paperwork from the finance company. 

As a result, you could face a hefty bill – or even repossession. To avoid any surprises, it’s always best to get your finance check.

Can I sell a car with outstanding finance to a dealer?

It is unlawful to sell a car with an outstanding finance check to a dealer. The dealer can only legally buy the car once the seller has settled the outstanding balance with the finance company.

If the dealer does buy the car, they are taking on the risk that the finance company will eventually repossess the vehicle.  For this reason, most dealers will only buy cars that have been paid off in full. However, there are some exceptions.

Some dealers may be willing to purchase a car with outstanding finance if the seller can provide proof that they have arranged for the balance to be paid off within a certain period. 

In addition, some companies may be willing to take over the finance agreement and allow the dealer to sell the car without having to pay off the balance in full.

Do I Need An HPI Check If I Am Buying From A Dealer?

When buying a car from a dealer, they will often offer to do an HPI check on the vehicle for you.

This service checks whether the car has been stolen, written off, number plate changed, previous owners, previous MOT status, scrapped, imported/exported or is subject to finance agreements. 

It is a valuable check to have, particularly if you are buying from a private seller, as it gives you peace of mind that the car is not stolen and that you will be able to get the total value of the vehicle when you come to sell it.

A dealer who doesn’t check their cars’ HPI

Consider purchasing a used car from a dealer who does not offer an HPI check. In that case, this does not necessarily indicate that the vehicle has a hidden history. You should consider it a red flag and perform a vehicle history check.

Our comprehensive full car check will reveal the following critical information for a car on finance and 25+ data points:

  • Finance company name
  • Agreement number
  • Transaction Date
  • Contact number
  • Agreement term
  • Agreement type

You will also benefit from a £30,000 data guarantee, which means that if some of the information is incorrect, we will cover your cost under specific terms and conditions.

How do you avoid buying a car with outstanding finance? 

Avoiding a car with outstanding finances is crucial to prevent legal and financial complications. Follow these steps to ensure a smooth and clear purchase:

  1. Vehicle History Report: Obtain a comprehensive report from reputable services like Carfax or AutoCheck. This report will reveal any outstanding loans or liens on the car.
  2. Verify Ownership: Confirm that the seller is the vehicle’s legal owner. Check the title and request a lien release letter from the lender indicating the debt is paid off.
  3. Use Escrow Services: Consider using an escrow service for the transaction. These services hold the payment until all necessary checks have been completed, reducing the risk of fraud.
  4. Consult Legal Professionals: When in doubt, seek legal counsel experienced in car purchases. They can review the paperwork and ensure transparency in the transaction, protecting your interests.
  5. Ask Questions: Don’t hesitate to ask the seller about the car’s financial history. Clear, honest communication is essential in these transactions.


If you’re thinking about buying a used car from a dealer, there’s no reason why you shouldn’t consider one that still has active financing attached to it.

Dealing with a car with outstanding finance can be a challenging and costly experience for dealers and buyers. To avoid legal and financial complications, it is essential to conduct due diligence, employ the recommended methods for detecting outstanding finance, and, most importantly, act ethically and transparently throughout the buying and selling process. By following these guidelines, dealerships and buyers can ensure that their automotive transactions are smooth, lawful, and free from financial encumbrances, ultimately protecting their interests and preserving their reputations in the marketplace.

Answering your questions

Can You Legally Sell a Car with Outstanding Finance?

Yes, selling a car with outstanding finance is legal, but there are essential steps to follow. The seller must pay off the outstanding debt before transferring ownership to the buyer. This ensures the vehicle’s title is clear of any liens, and the buyer gets full ownership rights.

Can You Negotiate the Sale Price of a Car with Outstanding Finance?

Yes, you can negotiate the sale price of a car with outstanding finance. However, it’s essential to consider the outstanding loan amount when negotiating. The seller may need to use a portion of the sale proceeds to pay off the debt, which can affect the final price.

How long does it take for finance to clear on HPI?

The time it takes for finance to clear an HPI (Hire Purchase Information) check can vary but typically ranges from a few days to a few weeks. It depends on factors such as the lender’s responsiveness and the complexity of the financial arrangements.