When selling an electric vehicle (EV) with outstanding finance, it’s essential to understand that negative equity may be involved.
A Guide To Selling A Car On Finance.
Introduction
EV depreciation is a concern for sellers. Ev’s prices have fallen harder than their Hybrid or normal petrol or diesel counterparts. There are several reasons for that, which we cover elsewhere on this website.
However, this doesn’t mean you can’t or shouldn’t sell your car on finance even if you do have negative equity.
EVbuyer will help ease the pain of negative equity by ensuring you get the best offer.
But on occasion, we might advise you there are other ways out of the situation if you are in financial difficulty,
This is when it pays to understand your rights under UK law (including the 50% half rule for voluntary termination and the one-third rule for repossessions). Read below for more details.
1. Selling an EV on Finance & Negative Equity
You’re in negative equity if your EV’s market value is lower than your settlement figure (the amount needed to clear the finance). For example, if you owe £10,000 but your car is only worth £8,000, you’ll need to pay the £2,000 difference if you decide to sell.
Some EVs depreciate faster than expected, leading owners into negative equity earlier in the contract.
Your Options
- Pay the Shortfall
Sell the car, then cover any leftover debt yourself. - Voluntary Termination (VT)
If you’re on a Hire Purchase (HP) or Personal Contract Purchase (PCP) and have paid 50% of the total amount payable, you can return the car (subject to mileage or damage fees). - Keep the EV
Continue making payments until depreciation levels out or until you can comfortably cover the shortfall.
2. Voluntary Termination (The 50% Rule)
Under sections 99–100 of the Consumer Credit Act 1974, you can end HP or PCP early by returning the car. You must have paid at least 50% of the total amount payable (including interest, fees, deposits, and any balloon payment).
- If you haven’t reached 50%, you can “top up” to that amount and return the vehicle.
- You may still owe excess mileage or damage charges.
- Voluntary termination can appear on your credit file, so speak to your lender if unsure.
For more information, see:
3. Repossession & The One-Third (⅓) Rule
Despite talk of a “two-thirds rule,” the threshold in the Consumer Credit Act is one-third (sections 90–91). Once you’ve paid at least one-third of the total amount payable, the car becomes “protected goods,” and the lender needs a court order to repossess from your private property.
- If you’ve paid less than one-third, the lender can repossess without going to court.
- This doesn’t terminate your contract; it simply limits repossession powers.
Learn more here:
4. Settlement Figures & Selling a Car on Finance
Before selling, request a settlement figure from your lender. This tells you exactly how much is left to pay, including any early repayment or admin fees. When selling to a private buyer, be sure the finance is cleared before handing over the vehicle, or have a formal arrangement with your lender to transfer ownership correctly.
5. We Can Help Retrieve Your Finance Record
Here at EV BUYER, we can contact your lender (with your permission) to confirm your outstanding balance and settlement figure. Having complete information helps you avoid surprises—especially if you’re navigating negative equity or considering voluntary termination.
6. Useful Resources & Links
- Consumer Credit Act 1974
- Citizens Advice – HP & Conditional Sale
- MoneyHelper – Hire Purchase
- Financial Ombudsman Service – Motor Finance
7. UK Car Finance Companies
Always confirm settlement details or any negative equity questions with your specific lender.
| Finance Company | Website | Contact Number |
|---|---|---|
| 1. Barclays | barclays.co.uk | 0345 734 5345 |
| 2. Santander | santander.co.uk | 0800 389 7000 |
| 3. Lloyds Bank | lloydsbank.com | 0345 602 1997 |
| 4. HSBC | hsbc.co.uk | 0345 740 4404 |
| 5. NatWest | natwest.com | 03457 888 444 |
| 6. Royal Bank of Scotland | rbs.co.uk | 03457 242 424 |
| 7. Nationwide | nationwide.co.uk | 03457 302010 |
| 8. Tesco Bank | tescobank.com | 0345 600 6016 |
| 9. Sainsbury’s Bank | sainsburysbank.co.uk | 08085 40 50 60 |
| 10. Halifax | halifax.co.uk | 0345 720 3040 |
| 11. BMW Financial Services | bmwfs.co.uk | 0370 5050 150 |
| 12. Mercedes-Benz Finance | mercedes-benz.co.uk/finance | 0370 847 0700 |
| 13. Volkswagen Financial Svcs | vwfs.co.uk | 0370 010 2022 |
| 14. Black Horse (Lloyds) | blackhorse.co.uk | 0344 824 8888 |
| 15. MotoNovo Finance | motonovofinance.com | 0333 200 0030 |
F9. Frequently Asked Questions (FAQs)
Q1: Can I sell my EV privately if it’s still in finance?
Yes. However, you (or the buyer) must pay off the outstanding finance before ownership can legally transfer. Ask your lender for a settlement figure, and ensure the transaction is handled securely.
Q2: Does negative equity disappear if I do voluntary termination?
Voluntary termination allows you to return the car once you’ve paid 50% of the total amount payable, but any shortfall (e.g., fees for damage or mileage) may still apply. Negative equity doesn’t simply vanish; it’s about whether the total debt has been covered.
Q3: Will voluntary termination harm my credit score?
Voluntary termination can appear on your credit file. It’s a legal right but may make future lenders cautious. Always discuss options with your finance provider first.
Q4: Is there no “two-thirds rule”?
Correct. The Consumer Credit Act states that once you’ve paid one-third, a lender needs a court order to repossess your property. There is no two-thirds rule in UK legislation.
Q5: How do I handle extra charges like excess mileage or damage fees?
If you terminate early or hand the car back, you can be charged for mileage beyond the agreed limit or damage outside fair wear and tear. Read your contract thoroughly for details.in Thoughts
Always check your finance agreement and any potential excess mileage or damage fees. For further clarity, speak to your lender or contact EV BUYER—we’re here to help you navigate the process smoothly.
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