Scrapping a car might feel like a quick and easy way to get rid of an old motor, but what if there’s still finance left on it? Whether you’re dealing with a PCP, HP, or personal loan, it’s important to understand your rights and the legal implications before you send your car off to the scrap yard.
Let’s break it all down in plain English.
Can You Legally Scrap a Car With Finance Still Owed?
In short – no, you can’t legally scrap a car that still has outstanding finance, unless you have permission from the finance company.
Here’s why: when you take out finance on a vehicle (like Hire Purchase or PCP), you don’t technically own it until the final payment is made. The car legally belongs to the lender, and you’re essentially leasing it over time. That means you can’t sell, scrap, or even give it away without breaching the finance agreement.
What Happens If You Scrap It Anyway?
Trying to scrap a financed car without telling the lender is a bad idea. Not only could you be in breach of your finance agreement, but it could also be considered fraud and that’s not something you want to mess around with.
Even if the scrapyard doesn’t check (some do, some don’t), the paperwork will eventually catch up with you. The DVLA will be informed the vehicle’s been scrapped, and the finance company will wonder what’s happened to their asset.
What Are Your Options?
If your car still has finance but you want to get rid of it, here are a few safer routes to consider:
Speak to your finance company – Some lenders will allow you to pay a settlement figure to clear the remaining finance and then scrap the car.
Check for voluntary termination – If you’ve paid off at least 50% of the total amount owed (including fees), you may be eligible to hand the car back under a clause called voluntary termination.
Sell to a dealer who can settle the finance – Some car dealers or online platforms will buy cars with finance and settle the balance directly with the lender. This usually applies to cars in decent condition though – so it’s not ideal if yours is ready for the scrap heap.
What If You’ve Already Paid Off the Finance?
Once the final payment has been made and the car is officially yours, you’re free to do whatever you like with it, including scrapping it. Just make sure you’ve received confirmation from the finance company that the agreement is fully settled.
If you’re not sure, contact them to request a settlement letter or check your online account. Better safe than sorry.
Don’t Forget the DVLA & Paperwork
When you scrap a car (finance or not), you still need to:
- Notify the DVLA using the yellow section (V5C/3) of your logbook (we handle this for you)
- Get a Certificate of Destruction (CoD) (we handle this for you)
- Inform your insurance company and cancel your policy (we can advise on how to do this)
- Make sure any personal belongings are removed before the vehicle is taken away (we will do another check to be safe)
Skipping these steps could lead to fines or unexpected issues later on, like being chased for tax or insurance on a car that no longer exists.
Final Thoughts
If your car has outstanding finance, don’t scrap it without checking first. It’s not worth the legal risk and it could cost you more than the car’s worth in the long run.
The best approach is to be upfront with your finance company. Explore your options, and only move forward when the vehicle is officially yours to scrap.
Need help scrapping a car the right way? Get in touch and we’ll guide you through it.
