Can You Part Exchange a Car on Finance?

At Sandicliffe, we’re often asked whether it’s possible to part exchange a car that’s still on finance, and the good news is, in most cases, yes, you can.

However, the process works a little differently compared to part exchanging a car you own outright. In this guide, we’ll walk you through how it works, what to consider, and how to get the best value from your current vehicle.

What Does Part Exchange Mean?

Part exchange is a simple and convenient way to upgrade your car. Instead of selling your current vehicle privately, you trade it in at a dealership as part of the payment for your next car.

The value of your current car is deducted from the price of the new one, making the process quick and hassle-free.

Can You Part Exchange a Car on Finance?

Yes, you can part exchange a car that is still on finance, but there’s an important factor to consider: your settlement figure.

The settlement figure is the amount required to pay off your existing finance agreement in full. This is provided by your finance company and may differ slightly from your remaining balance due to interest or early repayment terms.

How Does It Work?

When you part exchange a car on finance, the process typically looks like this:

1. Get Your Settlement Figure

Contact your finance provider to find out exactly how much is left to pay on your agreement.

2. Value Your Car

A dealership will assess your car and offer a part exchange value based on its condition, mileage, and market demand.

3. Compare the Figures

If your car’s value is higher than the settlement figure, you have positive equity. This amount can go towards your next car.
If your car’s value is lower than the settlement figure, you have negative equity. This means you’ll need to cover the difference, either upfront or by adding it to your new finance agreement.

4. Settle the Finance

The dealership will usually handle paying off your existing finance directly, making the transition smooth and stress-free.

What is Positive and Negative Equity?

Understanding equity is key when part exchanging a financed vehicle:

Positive Equity: Your car is worth more than what you owe. This puts you in a strong position when upgrading.
Negative Equity: Your car is worth less than what you owe. While you can still part exchange, it may increase your next finance agreement.

Benefits of Part Exchanging a Financed Car

Part exchanging a car on finance comes with several advantages:

Convenience, no need to sell your car privately
Speed, everything is handled in one place
Simple Process, the dealership manages the finance settlement
Flexible Options, ability to roll over equity into your next vehicle

Things to Consider

Before deciding to part exchange, keep these points in mind:

Check your finance agreement for any early repayment fees
Ensure you understand your car’s current market value
Consider whether adding negative equity to a new agreement is the right choice for your budget
Shop around to ensure you’re getting a fair valuation

Is Part Exchange Right for You?

If you’re looking for a quick and straightforward way to change your car, part exchange can be an excellent option, even if your current vehicle is on finance.

It’s particularly useful if you want to avoid the time and uncertainty of selling privately, while still getting a competitive value for your car.

Summary

You can part exchange a car on finance, as long as your existing agreement is settled as part of the process. Whether you have positive or negative equity will determine how much you can put towards your next vehicle.

For tailored advice and a competitive valuation, visit your nearest Sandicliffe and explore your options with our expert team.