Can I scrap my car if I have unpaid debt?

Posted by Garth Lee on January 9th, 2024

You cannot scrap your car if you haven't paid off all of the outstanding debt associated with it. The law says that any financing choices used to buy an automobile must be completely paid off before you can sell it, even if you're selling it for scrap, though there are a few exceptions to this regulation. Even though you are able to drive the car, it does not belong to you when you have unpaid debt on it. Rather, the moneylender owns it. This implies that you are attempting to sell something that is not yours when you try to sell a car on credit while there is still debt to be paid off. Here's what to do if you're considering selling a car that's still under financing. Scrap my car Stockport can give more advises on that.

When it comes to a car loan, who is the true owner?

There are many different ways to finance an automobile, but regardless of the type of financing you chose—lease, credit sale, or hire purchase—you do not actually own the vehicle until all of the payments are made. An automobile that has outstanding debt cannot be sold by you. This rule does have a few exceptions. For instance, if you obtain a bank loan and utilise it to purchase a car, the car will be yours. As a result, you are free to sell at any moment, but you will still be responsible for repaying the bank loan.

You are permitted to sell your car for scrap if you purchased it with an overdraft.

How to Use Finance to Sell a Car

Before you may sell your car for scrap, you must pay off any existing obligation associated with it. Keep in mind that early debt settlement frequently carries a cost. It's possible that the cost of the loan settlement will exceed the car's value. Though this is very much case by case, some Scrap my car Stockport will take on the finance in order to make a sale.

You are left with no alternative but to keep up with your regular payments until the debt is settled and you are able to take ownership of the car in cases where you are unable to pay off your lender in full. You can be certain that this is a poor choice if you do manage to locate a scrap dealer who is prepared to purchase your car for junk even though it is financed. A car that has unpaid debt still attached to it will not be accepted by a respectable junk buyer.

Is It Possible to Get Arrested for Financing a Car Sale?

The short answer to the question "is it illegal to sell a car with outstanding finance?" is yes, as many auto owners have wondered. The only way to sell a car with unpaid loans is to pay off the debt first. But the usual answer to the question, "Can you go to jail for selling a car on finance?" is no. Errors do occur, particularly at the tense moments when an automobile needs to be scrapped.

However, the only way you could end up in jail or prison is if you deliberately plot to deceive your insurance provider. Selling a car on finance is more likely to be a civil matter in any other circumstances. Therefore, even though you won't go to jail, you will still have to pay the full amount owed, frequently plus an additional fee, and risk being sued by the buyer and the finance company.

What Takes Place If I Sell a Car with Unpaid Debt?

There's a considerable probability that you may receive a police visit if you purchase an automobile without realising it still has unpaid debt and then attempt to sell it. It is surprisingly common for this to occur, which is why it is crucial to look up an automobile's financial history before purchasing one.

Scrap my car Stockport advises that a ll you have to do is prove that you were acting in good faith if the worst does occur and you discover that you unintentionally sold a car with unpaid debt. You won't experience any consequences in the great majority of situations. If the person you sell the car to can also demonstrate that they purchased it in good faith, they could be able to keep the vehicle as well. However, in many situations, the debtor loan company will wish to take back the car, which may result in legal action. The purchaser will have incurred costs for the car, and should it be repossessed, they will have nothing to show for their outlay.

The procedure of selling an automobile for scrap is frequently rather easy, however it becomes much more difficult if your vehicle has unpaid debt. Before beginning the process of having your car with outstanding debt scrapped, make sure you understand exactly where you stand and how much you owe.