Can you scrap a car on finance?

From a legal standpoint no, you can’t scrap a car if you’re still paying it off through finance. The car isn’t legally yours yet, even if you're using it every day. Not yet.

When you sign a finance agreement, the lender keeps ownership of the car until you’ve made the final payment . So if you scrap the car before paying it off, you’re getting rid of something that doesn’t fully belong to you.

That can cause serious problems. The finance company could charge you the full balance, take legal action, or ask for compensation. And you might end up paying more in the long run.

But once you’ve paid it off, the car is yours. Fully yours. You can scrap it, sell it, or keep it, whatever suits you.

How do different types of car finance agreements affect your rights?

The type of finance agreement affects your rights:

• Hire Purchase (HP) and Personal Contract Purchase (PCP): You don’t own the car until the final payment is made, so you can’t legally scrap it during the term.

• Car lease: You never own the car. It must be returned unless you choose to buy it at the end (if your agreement allows).

• Personal loan (unsecured finance): You own the vehicle from day one, even though you’re still repaying the loan. In this case, you can scrap or sell the car at any time.

Always speak to your finance provider before taking any steps to dispose of the vehicle. They may offer a solution, such as an early settlement figure or voluntary termination, depending on your agreement.

What are your options?

Request settlement figures

You can ask your finance company how much it would cost to pay off the loan early. This is called a settlement figure. It’s the full amount you need to own the car outright.

Once you pay it, the car is yours. You can then sell it, scrap it, or keep it — it’s up to you.

Some dealers might offer to part-exchange your car. This means they’ll value your car and use that amount towards a new one. If your car is worth more than what you owe, they may pay off the finance for you.

But this only works if your car is in good condition. If it’s damaged or not worth much, dealers are less likely to accept it.

Voluntary termination

You can end your car finance early using voluntary termination . This is a legal right under your agreement if you’ve paid at least 50% of the total amount, including all fees and interest.

This option is helpful if your car isn’t worth much or you don’t want to keep it. You return the car, and you don’t have to pay the rest of the finance — but only if you've already covered half the full amount. And the car must be in fair condition when you give it back.

If you haven’t paid 50% yet, or if you're dealing with other debts too, there are other ways to get help. You might consider an Individual Voluntary Arrangement (IVA) or a Debt Management Plan (DMP). These are formal plans that help you deal with several debts at once — not just your car finance.

Get your car repaired

You can repair the car if it’s still fixable. This might be a better choice than scrapping or handing it back, especially if repairs cost less than the finance you still owe.

But keep in mind, fixing the car doesn’t change your loan. You still need to make your monthly payments until the finance is paid off or settled. And once the car is roadworthy again, you might be able to sell it or trade it in to recover some money.

Before doing anything, get a professional to check the damage. That way, you’ll know if the repairs are worth it.

Find a buyer to settle your outstanding debt

You can sell your car to a dealer who agrees to pay off the finance for you. This is only possible if the car is in decent condition and still holds enough value.

The dealer will pay the remaining finance directly to the lender, then take ownership of the car. If your car is worth more than what you owe, you might be able to use the extra value as a deposit for another vehicle.

But if the car is worth less than the outstanding finance, you’ll have to pay the difference yourself to clear the debt.