Trading In or Buying With Finance: Settling the Paperwork

Why finance changes a part exchange

With some types of finance, the lender keeps an interest in the car until the agreement is paid off, even though you have it and drive it every day. That matters because you can only pass on a clean title to a car that is free of any outstanding claim.

In practice, a garage taking your car in part exchange needs to know what is owed and how that debt will be cleared. That is why the first step is usually to ask your lender where you stand, rather than guessing from your monthly statements.

The settlement figure from your lender

The key number is the settlement figure, which your lender can provide on request. It is the amount needed to pay off the agreement in full at a given date, and it is not necessarily the same as the balance on your last statement.

Settlement figures are normally valid for a limited period, so ask your lender how long yours lasts and what happens if the sale takes longer. Get the figure in writing and keep it with your other paperwork. Terms such as early settlement and any fees are set out in your agreement, so read it or ask your lender to explain.

• Ask your lender for a written settlement figure
• Check the date it is valid until
• Ask how payment will reach the lender and who arranges it
• Keep a copy of every document you are given

What a part exchange valuation involves

A garage will value your car based on its make, model, age, mileage, condition and service history, as well as what is happening in the market for similar cars. A valuation is an opinion on the day, and it may change if the inspection finds something the photos or description did not show.

Be honest about faults, warning lights and accident history. It is far better for the valuation to reflect the real condition than to have the deal unravel at handover. Having your service book, MOT history and both keys to hand helps the garage reach a fair figure.

• Service history and MOT records
• Both keys and any locking wheel nut key
• Handbook and spare wheel or repair kit
• Any known faults or warning lights

The V5C and ownership checks

The V5C, often called the logbook, is the registration document for the car. It shows the registered keeper, which is the person responsible for the vehicle, but it is not proof of ownership. If a car is on finance, the lender may still own it or hold an interest in it.

Check that the name and address on the V5C are yours and that the details match the car, including the registration, chassis number and engine number if shown. Mixed-up details are a common cause of delay. If you have lost the V5C, contact the DVLA, as you will need it to move the car on.

If you are buying with finance as well

Buying your next car on finance adds a second set of paperwork. The garage may be able to talk you through the finance options where available, and you should read the agreement carefully before signing, including the total amount payable, the term and what happens at the end.

Finance is a regulated product with its own rules, and we cannot advise on whether it suits your circumstances. Take your time, ask questions, and do not sign anything you do not understand. Any deposit or part exchange value will normally be shown in the paperwork, so check it matches what you agreed.

Checks on the car you are buying

The same care applies to the car coming your way. A history check can show outstanding finance, previous keepers and whether the vehicle has been recorded as written off. Ask to see the V5C and the service history, and check that the details match.

At Banks of the Tyne in Hebburn we handle part exchange, valuations and the sale of used cars that have been prepared and inspected, and we are happy to walk you through the paperwork. We also buy vehicles directly from customers, so ask us if you would rather sell than part exchange.

Frequently asked questions