- Published 12/09/2022
Can I scrap my car if I still owe finance?
If your car has broken down and selling it as a working vehicle is not possible, it may be more economical to send it to a scrapyard. However, if you have outstanding debt which needs to be paid off first, you might be wondering if this is a feasible option.
The usual answer is no, and here are the reasons why.
Who is the owner of a financed car?
If you have outstanding finance on a car, you will not yet be the legal owner of it. Instead, the owner will be the company that has financed the vehicle. As scrapping your car is a form of selling it, this means that you will generally have to pay off all debt in full before you do so – otherwise, this could put you at risk of breaking the law.
What's more, you could damage your credit score, as the finance company are allowed to report you to the credit bureaus if they discover you have sold or disposed of their property.
The best thing to do is reach out to your lender to ask for permission. In their reply, they will likely request that you pay off the remaining debt before they can release the vehicle. After you have done this and have been given their go-ahead, you are free to sell it for whatever purpose you choose, but just make sure to keep the paperwork so you can prove that the transaction is legal.
Will a scrapping company accept a car with outstanding finance?
If you find someone who is willing to accept your car for scrap before getting permission to do so, this should be taken as a major red flag. Any responsible company will recognise that the vehicle is tied to unpaid debt and will not accept it to protect itself from liability.
Here at Motorwise, we would always insist that you pay off all outstanding bills on your car before scrapping it. For a free quote on how much your scrap car could be worth, get an instant quote today!