Can You Trade in a Car That’s on Finance?

Yes, you can part-exchange a car on finance, but you need to settle the remaining finance first. When you trade in your car, the dealership or finance provider will calculate how much is left to pay on your current agreement and whether your car’s value covers it.
There are two possible situations:

• Positive Equity: If your car’s value is higher than the remaining finance balance, the extra amount can go towards your new vehicle as a deposit.
• Negative Equity: If your car is worth less than what you owe, you’ll need to pay the difference or roll it into a new finance agreement.

Steps to Part Exchanging a Car on Finance

Step 1: Get a Settlement Figure

First, contact your current finance provider to request a settlement figure – this is the amount needed to pay off your existing finance agreement.

Step 2: Get a Valuation for Your Car

Next, find out how much your car is worth. You can do this by:

• Checking online valuation tools.
• Getting quotes from dealerships.
• Comparing prices for similar models.

Step 3: Compare the Figures

Once you have both the settlement figure and your car’s valuation, compare them to see if you have positive or negative equity.
Step 4: Choose a New Car and Finance Option

If you decide to proceed with part exchanging, the dealership will settle your existing finance and put any remaining equity towards your new car. If you have negative equity, discuss with the dealer how you can manage the shortfall.

Step 5: Complete the Paperwork

Your dealer will handle most of the admin, including contacting your finance provider and arranging the new finance agreement.

Things to Consider Before Part Exchanging

• Check for Early Repayment Charges: Some finance agreements include fees for settling early.
• Be Aware of Mileage and Condition Rules: If your car is on a PCP agreement, excess mileage or damage could affect the trade-in value.
• Shop Around: Different dealerships may offer different valuations, so compare offers before making a decision.
  

Final Thoughts

Part exchanging a car on finance is a straightforward process if you follow the right steps. Whether you have positive or negative equity, understanding your options can help you make the best financial decision.
At carloans 365, we can help you explore part exchange options and find the best deal for your next car. Get in touch today to see how we can assist you!