Scrapping a Car with Outstanding Finance: What to Do

Scrapping a car with outstanding finance can be more complex than scrapping a car you own outright. However, it's still possible to do it legally and responsibly. Here's what you need to know:

1. Inform the Finance Company

The first step is to contact your finance company and inform them of your intention to scrap the car. They will guide you through the process and explain your options. It's crucial to communicate with them openly and honestly to avoid any potential issues.

2. Understand Your Options

Depending on your finance agreement and the car's value, you typically have two options:

• Settle the Finance: You can settle the outstanding finance amount and then scrap the car as you would with a car you own outright. This option gives you full ownership and allows you to proceed with scrapping without any restrictions.
• Scrap with Finance Outstanding: If settling the finance isn't feasible, you might be able to scrap the car with the finance outstanding. However, this requires careful consideration and agreement with the finance company. The scrap value of the car will likely be used to pay off part of the outstanding finance, but you might still be responsible for any remaining balance.

3. Get a Settlement Figure

If you choose to settle the finance, request a settlement figure from the finance company. This figure will include the outstanding balance plus any early settlement fees that may apply. Compare this figure with the potential scrap value of your car to make an informed decision.

4. Choose a Reputable Scrap Yard

Select a reputable scrap yard that is aware of and experienced in handling cars with outstanding finance. They can guide you through the process and ensure all legal requirements are met.

5. Complete the Necessary Paperwork

Ensure all necessary paperwork is completed correctly, including the V5C registration document and any finance agreements. The finance company will usually need to be involved in the paperwork process to transfer ownership legally.

6. Obtain a Certificate of Destruction

Once the car has been scrapped, obtain a Certificate of Destruction (COD) from the authorized treatment facility (ATF). This document is crucial for proving legal disposal and may be required by the finance company.

7. Settle Any Remaining Balance

If the scrap value of the car doesn't cover the outstanding finance, you'll need to settle any remaining balance with the finance company according to their terms.

Scrapping a car with outstanding finance requires careful planning and communication with the finance company. At Scrap My Car Online, we can assist you with the process and connect you with reputable scrap yards experienced in handling financed cars. Contact us today for guidance and support.