The subject of vehicles on finance is one that comes up quite often on the car scrapping scene. Contrary to popular belief, most people in the UK buy cars and other vehicles on finance. Handing over four or five figures in cash for a car isn’t something most people are willing or capable of doing.

But what happens if you find yourself in a situation where your car is no longer roadworthy, and you still have outstanding payments?  Under normal circumstances you’d scrap it and recycle it, but how are things different if your car is still technically on finance?

A Provider-Specific Issue

The simple fact of the matter is that with vehicle finance, you are not the legal owner of your car until you have paid for it in full. Whatever happens in the interim, it remains the legal property of the finance provider.

What this means is that in a general sense, you are prohibited from doing anything with your car that is not expressly authorised by its legal owner.  As would be the case when renting a car, you cannot sell it, you cannot make any major modifications to it, and you cannot transfer ownership of it.

Doing so would render the terms and conditions of your contract null and void, and could see you lumped with a final demand for full payment of the outstanding balance. That, or repossession of the car, and no refund on any payments made to date.

All well and good, but a car that needs to be scrapped due to no longer having any practical value is a different story entirely. If something goes catastrophically wrong with your car for any given reason, scrapping and recycling it may be the only realistic option.

This is not a scenario car finance companies will be unfamiliar with. As you’d expect, the short the answer to the question in most instances is yes – scrapping a completely useless car with outstanding finance payment is possible.

However, you will first need to seek the full authorisation of your finance provider, given how it is technically their car.  In addition, you will still be liable for all subsequent monthly repayments on the car, until the balance has been repaid in full. 

That is, unless the reason the vehicle is being strapped is due to some catastrophic issue that was kept from your attention at the time you bought it.  At which point, legal advice may be called for, in order to see where you stand.

If in Doubt, Always Ask

Truth is, most car finance companies will refuse to fund the purchase of a vehicle that is not in excellent condition. This therefore means that the above scenario should never really come into the equation.

If it does, there will be protocols in place with your car finance provider to deal with it accordingly. They’ll tell you what to do, and give you a full overview of your entitlements and obligations.

Just don’t go scrapping a car that is still on finance without authorisation, or it could land you in a world of bother!