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Can You Sell a Car on Finance? Everything You Need to Know - MOTORS

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Everything You Need to Know - MOTORS" /> <meta property="og:description" content="Looking to sell your car but have outstanding finance? 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Everything You Need to Know </h1> </div> <div class="author-block-new-header-wrapper"> <div class="author-block-new-inner"> <img src="https://news.motors.co.uk/wp-content/uploads/2024/03/Steven_Edwards_motors.png" /> <div class="author-block-new-meta"> <p>Article by</p> <p class="author-block-new-meta-name"><a href="https://news.motors.co.uk/author/steve/">Steve Edwards</a></p> </div> </div> <div class="readtime"> <i class="fa fa-stopwatch" style="margin-right: 5px; font-size:16px;"></i> <span>…</span> min read </div> </div> </div> </div> </div> </div> </div> </div> <style> .banner__slides__slide .background::after { content: ' '; height: 100%; width: 100%; display: block; background-color: black; opacity: 0.4; } </style> <div class="subbanner_mobile"> <div class="subbanner_element subbanner_article_menu-close"> <img src="/wp-content/themes/hush-child/images/icon-close.png"> <span> Close </span> </div> <div class="subbanner_element active subbanner_article_menu"> <img 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News</a></li> <li class="page_item page-item-72820 page_item_has_children"><a href="https://news.motors.co.uk/news/motors-news/">MOTORS News</a></li> <li class="page_item page-item-72822"><a href="https://news.motors.co.uk/news/entertainment/">Entertainment</a></li> </ul> </div> </div> <div class="main-content option-align-left option-button_or_link-button layout-nobackground" > <div class="container"> <div class="text "> <p><!-- Tab: Content --></p> <p>Wondering whether you can sell a car on finance? In short, the answer is yes, however, it is more complicated than this.</p> <p>If you are considering selling a car that is on finance, it is important to understand that this process differs from selling a car which is owned outright. Before selling a car on finance, you need to understand how your <a href="#current-circumstances-may-impact-the-process">current situation</a> and existing car finance arrangement can impact the selling process.</p> <p>Once you understand whether you can sell your car, it is important that you know either <a href="#selling-a-car-with-outstanding-finance">how to sell a car on finance</a> or how to <a href="#part-exchanging-a-car-on-finance">part exchange a car on finance</a> and the steps involved.</p> <p>In this article we will break down everything you need to know about selling a car with outstanding finance.<br /> <!-- Tab: Content --></p> <h2>What you need to know about selling a car on finance</h2> <p>Before you even consider selling a car on finance it is important to understand how your <a id="current-circumstances-may-impact-the-process"></a>current circumstances may impact the process. When we talk about current circumstances we are specifically referring to how legal ownership, opportunities to end your car finance arrangement early, and the value of your car can impact the selling process.</p> <h3>1. Who has ownership of the car</h3> <p>Who has legal ownership of your car has implications for selling a car on finance.</p> <p>In the majority of car finance arrangements, your V5C logbook will state that you are the registered keeper. However, it is your finance company who is the legal owner of the vehicle. This is because you do not become the legal owner of a car on finance until all repayments have been made and the contract has come to an end.</p> <p>As you are not the legal owner, it means that you have no legal right to sell your car while it is on finance. If you wish to sell your car on finance, your options are as follows:</p> <ul> <li>To voluntarily terminate your contract (this is not available for all car financing options).</li> <li>Request a settlement figure and pay the outstanding balance.</li> </ul> <h3>2. Voluntary termination or settlement</h3> <p>Voluntary termination and paying a settlement figure are two ways which allow you to end a car finance agreement early.</p> <p>Voluntary termination allows you to end a HP or PCP car finance agreement before you have made the final payment. To be eligible for voluntary termination, you must have financed your car as an individual and have either paid at least 50% of the contract, or be willing to.</p> </div> <!-- Button --> </div> </div> <div class="option-primary call-outs layout-nobackground option-rounded option-background_type-fill " > <div class="container"> <div title="" class="call-outs-content option-primary"> <div class="call-outs-content-text"> <h3>Understanding equity</h3> <h4><span style="color: #ffffff;">Positive equity</span></h4> <p>Positive equity is when the <a href="https://www.motors.co.uk/sell-my-car/car-valuation/" target="_blank" rel="noopener noreferrer">valuation of your car</a> is higher than the outstanding finance owed (the settlement figure). For instance, if your car has been valued at £10,000 and you owe £7,000, you will have £3,000 in positive equity.</p> <p>When it comes to selling your car, having positive equity is advantageous. This is because having positive equity allows you to sell your car, pay the settlement figure and still have money to spare which you can use to put towards <a href="https://www.motors.co.uk/used-cars/" target="_blank" rel="noopener noreferrer">your next car</a>.</p> <h4><span style="color: #ffffff;">Negative equity</span></h4> <p>Negative equity is when the <a href="https://www.motors.co.uk/sell-my-car/car-valuation/">valuation of your car</a> is lower than the settlement figure. For instance, if your car has been valued at £7,000 and you owe £10,000, you will have £3,000 in negative equity.</p> <p>Having negative equity when you go to sell your car can create issues. This is because the sale of your car won’t cover the full amount owed. You will then either have to pay the difference yourself, or in some cases your dealer may add the outstanding difference onto a new PCP or HP agreement.</p> </div> </div> </div> </div> <div class="main-content option-align-left option-button_or_link-button layout-nobackground" > <div class="container"> <div class="text "> <p><!-- Tab: Content --></p> <h2><a id="selling-a-car-with-outstanding-finance"></a>Selling a car with outstanding finance</h2> <p>Before you proceed with the sale of your car it is important that you understand how your car finance arrangement may impact the process and even your ability to sell your car.</p> <h3>Can I sell a car with outstanding PCP finance?</h3> <p>PCP finance, also known as Personal Contract Purchase finance, is a type of car finance which considers how much your car will be worth when your contract expires.</p> <p>The monthly payments on a PCP finance plan tend to be lower than other types of finance because the calculation acknowledges that your car’s value will depreciate over time.</p> <p>However, unlike other car financing options, if you wish to buy your vehicle at the end of your term, you must make a lump sum called a ‘balloon payment’.</p> <p>This is an optional payment which only needs to be paid if you wish to buy your car.</p> <p>If you have a car with outstanding PCP finance, you cannot technically sell it unless you have made the balloon payment.</p> <p>This is because it is only until you have made the final balloon payment that you become the legal owner of the vehicle.</p> <p>Should you wish to sell a car with outstanding PCP finance, we recommend that you speak to a reputable car dealer who will be able to work with your car finance company to arrange for the outstanding balance to be settled.</p> <h3>Can I sell a car with outstanding HP finance?</h3> <p>HP finance, also known as Hire Purchase finance, is a type of car finance where the balance of the car (after a deposit) is split into equal payments that are often spread over several years. Unlike a PCP finance arrangement, you will not need to make a large balloon payment to own your car.</p> <p>Instead, in order to own your car you will need to settle all repayments and pay a small &#8216;Option to Purchase&#8217; fee.</p> <p>Technically, it is illegal to sell a car with outstanding HP finance. This is because you only become the legal owner of the vehicle once all payments have been made.</p> <p>Should you wish to sell a car with outstanding HP finance, we recommend that you speak to a reputable dealer who will be able to work with your car finance company to arrange for the outstanding balance to be settled.</p> <h3>Can I sell a car with outstanding PCH finance?</h3> <p>PCH finance, also known as Personal Contract Hire finance, is a lease agreement rather than a purchase agreement. With a PCH finance arrangement you will have your car until the end of your contract, after this period of time you will have to hand back your keys because there is no opportunity to purchase your car.</p> <p>Since there is no opportunity to purchase a car on PCH finance, you are unable to sell a car with outstanding PCH finance.</p> <h3>Can I sell a car with outstanding CS finance?</h3> <p>CS finance, also known as Conditional Sale finance, is a type of car finance where you buy your car through monthly instalments.</p> <p>Unlike HP finance there is no ‘Option to Purchase’ fee in your final payment which means that when you sign the contract you are making a commitment to buy the vehicle.</p> <p>Under a CS finance arrangement the finance company owns the car until you make all the repayments. Therefore, while your car is on CS finance you are unable to sell it.</p> <p>However, once you make the final payment and become the legal owner of the vehicle you will be able to sell it.</p> <h3>Can I sell a car that was bought with a personal loan?</h3> <p>If you bought a car using a personal loan as opposed to buying a car on finance, you will be able to sell your car because you will be the legal owner of the vehicle.</p> <p>However, if you are considering using a personal loan to purchase a car it is important that you consider the depreciation of the vehicle.</p> <p>A car’s depreciation is important because when you go to sell it, you may find that the money does not cover the balance left on your loan. If this is the case, you will need to take the appropriate action to ensure that you are able to pay the remaining balance.</p> <h3><a id="part-exchanging-a-car-on-finance"></a>Part exchanging a car on finance</h3> <p>The process for part exchanging a car on finance is very similar to selling a car on finance.</p> <p>If you are considering part exchanging your car on finance, the first thing you will need to do is obtain a settlement figure. To obtain this figure you will need to contact your car finance company. They will then provide a settlement quote which is the total of your outstanding balance, plus any additional fees that they may charge you.</p> <p>Once you have obtained this settlement figure, you will need to <a href="https://www.motors.co.uk/sell-my-car/car-valuation/" target="_blank" rel="noopener noreferrer">get a valuation of your car</a>. With these two figures you will need to visit a car dealership and ask what part exchange they can offer.</p> <p>If you have outstanding finance a reputable car dealership should be able to liaise with your car finance company to clear the finance and enable you to proceed with part exchanging your car.</p> <p><!-- Tab: Content --></p> <h2>How to sell your car on finance</h2> <p>While selling your car on finance is slightly more complicated than the usual process, it is still a common occurrence. Here are the steps you need to follow when selling a car on finance.</p> <h3>1. Obtain a settlement figure</h3> <p>If you wish to sell your car with outstanding finance, you will need to get in touch with your car finance company and request a settlement figure. This settlement quote will be your outstanding balance plus any additional fees which your car finance company may charge for leaving the finance agreement early.</p> <p>How long it takes to receive your settlement figure after requesting it is dependent on your car finance company. However, they have a legal obligation to post a settlement figure within 12 days of your request.</p> <h3>2. Value your car</h3> <p>The next stage in selling your car with outstanding finance is to get a <a href="https://www.motors.co.uk/sell-my-car/car-valuation/">free online valuation</a>. To do so, simply head to our <a href="https://www.motors.co.uk/sell-my-car/car-valuation/">free online valuation tool</a>.</p> <p>By understanding how much your car could sell for, you will be able to work out whether you have positive or negative equity. If you have positive equity, the sale of your car will cover the settlement figure. Whereas, if you have negative equity, the sale of your will not cover the full settlement figure and you will need to take steps to ensure that you are able to pay the difference.</p> <h3>3. Settle the existing agreement</h3> <p>The settlement figure which you received will only be valid for a certain period of time. For this reason it is important that you pay off the outstanding balance (and additional fees) before it expires. If the valuation of your car is higher than the settlement quote, you will be in positive equity, and so, after paying the figure you will have money remaining.</p> <p>However, if the valuation of your car is lower than the settlement figure, you will be in negative equity. If this is the case, you will need to pay the difference.</p> <p>If you fail to pay the settlement figure and it expires, you will need to request a new figure before you can proceed to sell your car.</p> <p>You cannot sell your car before you have settled the finance. If you are selling your vehicle to a car dealership they may be able to assist you to settle the outstanding finance.</p> <h3>4. Sell your car</h3> <p>Once you have paid the settlement figure you will be able to sell your car.</p> <p>If you sorted your vehicle’s finance by yourself, you will be able to advertise your vehicle straight away. However, if you sold your vehicle to a car dealership they will need to complete the required paperwork and give you any remaining equity so that you can <a href="https://www.motors.co.uk/used-cars/">purchase your next car</a>, if desired.</p> </div> <!-- Button --> </div> </div> <div class="heading layout-nobackground option-titleside-center" > <div class="container"> <div class="heading__inner"> <div class="heading__inner__title"> <h2>FAQs</h2> </div> </div> </div> </div> <div class="accordion layout-nobackground option-style-plus option-border option-captions " > <div class="container"> <div class="dropdown"> <div class="dropdown__top"> <h3>Can you legally sell a car on finance?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>It is illegal to sell a car on finance because while you still have outstanding balance, you are not the legal owner of the vehicle.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>Can I sell my car on finance in negative equity?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>It is possible to sell a car on finance when it has negative equity. However, because your car is valued less than the outstanding balance you will still owe money. If this is the case, you will need to be able to pay the difference.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>How do you check if a car has outstanding finance?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>You can check if a car has outstanding finance by carrying out a vehicle finance check. </p> <p>Not only can a vehicle finance check see if there is any outstanding finance left to pay, but a full check can provide you with further information about the finance agreement and car finance company.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>Can I privately sell a car that's on finance?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>It is illegal to sell a car that is on finance to a private buyer without informing them of this arrangement.</p> <p>If you want to privately sell a car that’s on finance you will need to inform your car finance company of your intentions to sell the car and ask them to provide you with a settlement figure. Once you have paid the settlement figure you will become the legal owner of the vehicle, and so, you will be able to sell it privately.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>Can you give your car back if it's on finance?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>Yes, you may be able to give your car back if it’s on finance.</p> <p>If there has been a change in your circumstances and you are no longer able to keep up with the monthly repayments it is important that you contact your finance provider. Your finance provider will be able to assess your situation and assist you with understanding your options.</p> <p>Alternatively, if you have a HP or PCP car finance arrangement, you may be able to voluntarily terminate your contract early. However, it is important to note that voluntary termination may involve additional costs which is something to consider if you are thinking about giving your car back while it’s on finance.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>Can you swap finance from one car to another?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>You cannot swap finance from one car to another. This is because each car finance arrangement has been tailored to the specific vehicle. </p> <p>If you wish to swap finance from one car to another you should speak to a reputable car dealer. They will be able to assist you to sell your current vehicle and buy one to suit your current needs.</p> </div> </div> </div> <div class="dropdown"> <div class="dropdown__top"> <h3>Does paying off car finance early hurt your credit score?</h3> </div> <div class="dropdown__btm"> <div class="dropdown__btm__inner"> <p>In the short-term, paying off car finance early may slightly lower your credit score. This is because any change in your credit history (i.e. paying a loan) can impact your score. </p> <p>However, in the long-term paying off your car finance early should boost your credit score because lenders will be able to see that you were able to manage your money and clear the payments.</p> </div> </div> </div> </div> </div> <div class="banner layout-imagebackground layout-reset option-height-25 option-bgopacity_type-text option-background option-plain option-height-25 option-bgopacity_type-text option-background option-plain"> <div class="banner__slides option-type-image option-- option-image_side-right option-virtual-middle option-horizontal-centre option-width-100 option-titleimage_smallheader option-padding-normal option-bgopacity_type-text option-bgopacity_color- option-background"> <div class="banner__slides__slide"> <div class="banner__slides__outer"> <div class="banner__slides__inner "> <div class="banner__slides__inner__content"> <div class="banner__slides__inner__block"> <div class="banner__slides__inner__block__content"> <div class="banner__title"> <h2> Find your next car with Motors.co.uk </h2> </div> <div class="banner__text"> <p><!-- Tab: Content --></p> <p>If you are considering selling a car on finance, it is important to assess your current circumstance and understand how your current finance arrangement may impact the process. By taking the necessary steps outlined in our article, you can ensure that you legally sell your car, protecting you from any future complications.</p> <p>We understand that selling a car can be complicated, so to make the process of selling your car easier, at Motors, we offer a <strong><a href="https://www.motors.co.uk/sell-my-car/car-valuation/">free online car valuation tool</a></strong>. This tool  enables you to get the best price when selling your car. And when you’re ready, why not browse through our collection of cars for sale?</p> </div> </div> <div class="banner__slides__buttons"> <a href="https://www.motors.co.uk/used-cars/" target="_blank" class="button option-end-full option-background option-nobackground"> Search Used Cars </a> </div> </div> </div> <div class="banner__slides__inner__image"> <img src="https://news.motors.co.uk/wp-content/uploads/2023/04/Nissan-Leaf-driving-fast-around-bend-1024x682.jpg"> </div> </div> </div> </div> </div> </div> <div class="main-content option-align-left option-button_or_link-button layout-nobackground" > <div class="container"> <div class="text "> <h2>Related Articles and Advice</h2> </div> <!-- Button --> </div> </div> <div class="posts found posts--slick option-container option-large_gap option-titletext option-button option-button_text-Readmore option-button_type-arrow option-button_primary option-button_invert option-category_location-image_inside option-image_height-65 option-date_prepend-Published option-slick_arrows option-categorytag_empty option-scrollbar option-cards_shadow layout-nobackground option-show-3" data-display="3" data-postspage="8" > <div class="posts__outer"> <div class="posts__links__outer"> <div class="posts__links"> <a href="https://news.motors.co.uk/a-guide-to-getting-a-used-car-on-finance/" class="posts__links__link"> <div class="posts__links__outerlink"> <div class="posts__links__image"> <div class="background " style="background-image: url('https://news.motors.co.uk/wp-content/uploads/2023/08/Person-looking-at-car-finance-agreement-1-aspect-ratio-21-9.jpg');"> </div> </div> <div class="posts__links__inner"> <div class="posts__links__title"> <h3>A Guide to Getting a Used Car on Finance</h3> </div> <div class="posts__links__text"> <p>With lots of car finance options available, it can be confusing to know which one is right for you. Use our guide to find out how car finance works and what options are available t...</p> </div> <div class="posts__links__button"> <div class="arrow option-style-1"> <div>Read more</div> </div> </div> </div> </div> </a> <a href="https://news.motors.co.uk/what-is-pcp-finance/" class="posts__links__link"> <div class="posts__links__outerlink"> <div class="posts__links__image"> <div class="background " style="background-image: url('https://news.motors.co.uk/wp-content/uploads/2023/07/people-in-car-dealership-aspect-ratio-21-9.jpg');"> </div> </div> <div class="posts__links__inner"> <div class="posts__links__title"> <h3>What is PCP Car Finance?</h3> </div> <div class="posts__links__text"> <p>If you&#8217;re looking to purchase a used car, you might be considering a Personal Contract Purchase finance agreement as a method of payment. Personal contract purchase, also kno...</p> </div> <div class="posts__links__button"> <div class="arrow option-style-1"> <div>Read more</div> </div> </div> </div> </div> </a> </div> <div class="container"> <div class="scrollbar"> <div class="handle"> </div> </div> </div> </div> </div> </div> </div> <div class="container layout-background"> <div class="author-footer"> <div class="author-footer-new-inner"> <img src="https://news.motors.co.uk/wp-content/uploads/2024/03/Steven_Edwards_motors.png" /> <div class="author-footer-new-meta"> <div class="author-footer-new-meta-wrapper"> <div class="author-footer-new-meta-name"> Steve Edwards </div> <div class="author-footer-new-meta-socials"> <a href="https://twitter.com/writingsteven"><i class="fa-fw fab fa-twitter"></i></a><a href="https://www.instagram.com/steveecars"><i class="fa-fw fab fa-instagram"></i></a> </div> </div> <div class="author-footer-new-meta-bio"> A certified car nerd who has been creating car content since 2015, Steve is much happier talking about used cars under £15,000 than the latest hypercar. He’s been advising friends and family on their next used car purchase for as long as he can remember – handy experience for his current role in charge of content at MOTORS. As a father of two young kids who covers a lot of miles, he tends to value safety, practicality and comfort above all else, so he has a soft spot for massive SUVs and premium estate cars. </div> <div class="author-footer-new-meta-date"> Article published August 23rd, 2023 </div> </div> </div> </div> </div> <footer id="footer" class="footer"> <ul class="social_links"> <li> <a href="https://www.facebook.com/motors.co.uk" target="_blank" aria-label="Facebook"> <i class="fa-fw fab fa-facebook-f"></i> <div class="sr-only">Facebook</div> </a> </li><li> <a href="https://twitter.com/motorscouk" target="_blank" aria-label="Twitter"> <i class="fa-fw fab fa-twitter"></i> <div class="sr-only">Twitter</div> </a> </li><li> <a href="https://www.instagram.com/motorscouk/" target="_blank" aria-label="Instagram"> <i class="fa-fw fab fa-instagram"></i> <div class="sr-only">Instagram</div> </a> </li><li> <a href="https://www.youtube.com/user/Motorscouk" target="_blank" aria-label="Youtube"> <i class="fa-fw fab fa-youtube"></i> <div class="sr-only">Youtube</div> </a> </li> </ul> <div class="footer-nav"> <ul id="footer-menu" class="menu"><li id="menu-item-9139" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9139"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/contact/">contact us</a></li> <li id="menu-item-9140" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9140"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/contact/?tb=feedbackForm">feedback</a></li> <li id="menu-item-9141" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9141"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/jobs/">jobs</a></li> <li id="menu-item-9142" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9142"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/aboutus/">about us</a></li> <li id="menu-item-9143" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9143"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/terms-of-use/">terms of use</a></li> <li id="menu-item-9144" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9144"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/security/">safety guide</a></li> <li id="menu-item-9145" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9145"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/privacy/">privacy notice</a></li> <li id="menu-item-9146" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9146"><a target="_blank" rel="noopener" href="https://www.motors.co.uk/cookies-policy/">cookies policy</a></li> <li id="menu-item-9147" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9147"><a target="_blank" rel="noopener" href="#ot-sdk-btn">privacy settings</a></li> <li id="menu-item-9148" class="popmake-88611 menu-item menu-item-type-custom menu-item-object-custom menu-item-9148"><a target="_blank" rel="noopener" href="https://dealer.motors.co.uk/dealer-tools/">dealer tools</a></li> <li id="menu-item-9149" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-9149"><a target="_blank" rel="noopener" href="https://dealer.motors.co.uk">advertise with us</a></li> </ul> </div> <div class="footer-banner"> <li class="footer-banner-inner main-nav__item medium-margin-t"> <div class="advertise-with-us card flex j-space-between bg-white margin-auto"> <div> <h3 class="title-4 no-margin-b text-l">MOTORS for dealers</h3> <a class="btn" href="https://dealer.motors.co.uk/motors/?utm_source=news.motors.co.uk&#038;utm_campaign=advertise-with-us" type="button" target="_blank" rel="noopener noreferrer">Advertise with us</a> </div> <img class="circle" src="https://news.motors.co.uk/wp-content/uploads/2024/02/advertise_with_us.jpg" alt="advertise with us"> </div> </li> </div> <div class="footer-legal"> <p>Motors.co.uk Limited (FRN 922774) is an Appointed Representative of Consumer Credit Compliance Limited who are authorised and regulated by the Financial Conduct Authority (FRN 631736). 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