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If you’re an Irish driver with a car finance agreement, but are considering upgrading to a new vehicle, you might be wondering if you can transfer your existing finance from one car to another. While change can be exciting, it’s essential to understand that the process of transferring car finance in Ireland is more complex than switching lanes on the motorway.
In this article, we’ll break down the options available to you, explaining why transferring car finance to another vehicle isn’t possible and what alternatives you have when you’re looking to make a change in the Irish car finance market.
Understanding the Roadblock: Why You Can’t Transfer Car Finance
Unfortunately, transferring your existing car finance loan to a different vehicle isn’t an option in Ireland. This is because each finance agreement is specifically tailored to the car you’ve purchased, your financial situation at the time of the agreement, and the agreed-upon repayment terms with your lender.
Think of it like a jigsaw puzzle; all the pieces must fit together perfectly for the picture to work – it’s the same with a car finance agreement. If you decide to change your vehicle, the pieces no longer align, and your lender will need to create a new agreement based on the information for your new car.
While direct transfer may not be possible, there are alternative routes you can explore.
Your Options for Swapping a Financed Vehicle
Now that we’ve clarified that direct transfer isn’t an option, let’s explore the alternative paths available to you in the Irish car finance market:
You can settle your car finance agreement before its scheduled end date by paying off the remaining balance. This will make you the legal owner of the vehicle.
It’s essential to understand the differences between various types of agreements, such as Hire Purchase (HP) and Personal Contract Purchase (PCP). Early settlements may be more advantageous for those with a HP agreement than those with a PCP agreement, primarily due to the balloon payment associated with PCP agreements when settling the car finance loan.
Owning the vehicle outright allows you to sell it or use it as part of a new car purchase or finance agreement. To determine your early settlement figure, which is the remaining balance on your vehicle, contact your lender. Click here to request a settlement figure from LM Operations.
Voluntary Termination (VT)
Voluntary termination involves returning your financed vehicle to your lender voluntarily. When choosing VT, you may be required to pay 50% of the total amount payable, along with any applicable arrears or charges.
Remember that any damage or wear and tear on the vehicle may impact the process and potentially cost you more. After completing VT, you’ll receive a final billing letter detailing the balance payable, allowing you to consider a new car finance agreement if desired.
Can You Sell a Car with Outstanding Finance?
While the vehicle is under finance, it is not legal to sell it in Ireland. Ownership remains with the lender until the final repayment or payment of the appropriate fee, depending on the type of car finance agreement you have.
Part Exchange with Outstanding Finance
Yes, It’s Possible. If you’re interested in part exchanging a car with outstanding finance in Ireland, you have two options:
- Settling the Finance: You can pay off the remaining balance to become the legal owner of the vehicle. You can then use the car’s current market value as part of a new car purchase or finance agreement.
Using Market Value: Alternatively, you can utilise the vehicle’s market value to pay off outstanding finance, with any remaining value contributing toward a new car or finance agreement. However, this option is less common for those facing negative equity.
Navigating Negative Equity
Negative equity can be a challenge in your car finance journey. It occurs when your vehicle’s market value is less than the outstanding finance amount. This often happens due to depreciation, especially with new cars that tend to lose value quickly.
To bridge the gap, you may need to cover the difference between the early settlement figure and the vehicle’s actual value. It’s important to note that different lenders may have varying policies on valuation.
Seeking Alternatives: Refinancing Your Car
If you want to keep your car but need a more manageable finance agreement due to changing circumstances, refinancing is an option in the Irish car finance market. This involves securing a new finance agreement, often with a different lender, to pay off your existing loan with more favourable terms. However, be cautious, as lower monthly payments over an extended period may result in paying more overall. Interested in finding out more? Click here and a member of our team will be in touch to discuss your refinancing options.
Can I Transfer My Car Finance Agreement to Another Lender?
When considering changing elements of your finance plan, including your lender, it’s natural to wonder if you can transfer a car loan to another bank or finance provider in Ireland.
In many cases, it is possible to move your loan from one provider to another. To explore this option start by obtaining a settlement figure from your current lender. Armed with this information, you can initiate discussions with your preferred loan provider, allowing them to settle the existing finance and set up a new repayment plan with you. Effective communication with both lenders is key to ensuring a smooth transition that benefits your financial situation.
Will Outstanding Finance Affect My Car Finance Eligibility in Ireland?
Various factors influence car loan eligibility in Ireland, and it’s not solely determined by your credit score. Different lenders have their unique eligibility criteria, with one crucial aspect being your affordability.
Affordability depends on your disposable income after covering your monthly expenses. If taking on a new car loan would strain your finances and potentially jeopardise your ability to meet financial obligations, approval might be challenging.
However, if you plan to settle your outstanding finance before applying for a new car loan in Ireland, it can positively impact your eligibility. Responsible management of your existing loan, with consistent monthly repayments, can demonstrate your financial responsibility and make you a more appealing candidate for a new loan. To explore your eligibility further, click here.
We’re Here to Help!
While transferring car finance from one vehicle to another isn’t feasible in the Irish car finance market, there are plenty of options available if you’re looking to make a change. Early settlement, voluntary termination, and refinancing are all viable routes, each with its own considerations.
If you’re uncertain about your eligibility for a new car loan in Ireland, you can request a quote to find out if you’re pre-approved here.
If you need to request a settlement figure, you can do so here.
Alternatively, if you’re considering refinancing your existing vehicle, click here and a member of our team will be in touch.
We’re here to assist you in exploring these options and ensuring a smooth transition to your next set of wheels.
Your financial journey doesn’t have to come to a halt; it’s a matter of choosing the right path. Safe driving!