Car finance in Ireland: selling with finance outstanding

There are many reasons you might want to sell on a car you’ve bought on finance before the term of the deal is up. Your employment situation may change for better or worse, requiring you to trade up or down, or you may be expecting a new baby that means a larger car is needed. None of this is unusual and the banks are well used to it. However, depending on how you financed your car, you may not be allowed to just sell it on and get another one. Obviously, if you took out a regular bank or credit union loan, the car is fully yours to do what you want with, but that’s not the case with Hire Purchase (HP) and Personal Contract Plan (PCP) car finance.

PCP is effectively a type of HP, so they can be treated the same for the purposes of this article, and one critical, highly relevant, aspect of HP is that the borrower does not own the vehicle until the final payment is made (which may be never in the case of PCP, as most buyers roll it over to a new car at the end of the period). Hence, to try to sell the car before that, you’d be effectively selling something that does not belong to you. In simple terms, it’s not allowed.

But nothing is simple, is it? Many buyers that have purchased a car through HP finance go on to sell it privately, even though they should not. All cars with finance outstanding are registered with HPI and if you do a history check through Cartell.ie then it checks whether the vehicle in question has finance outstanding. We’d highly recommend that buyers never go ahead with the purchase of a car that still has finance on it, as the bank owns it and, if the original borrower defaults, the bank can repossess the car, regardless of who is possession of it at the time. The innocent second buyer has no comeback.

There are situations where the bank (usually one directly linked to the car maker rather than a high street bank) will assist with a change of ownership, but it will always require the loan being paid in full beforehand and this is simplified if one of the parties involved is a car dealership.

In summary, if you want to sell your car and there is still finance outstanding on it, you must speak to the lending institution first. It is highly likely they will furnish you with a settlement figure that will have to be paid before the car can change hands.