Can I Use My Part-Exchange as a Deposit on Van Finance?

Can I Use My Part-Exchange as a Deposit on Van Finance?

A current van or car may be accepted as part-exchange when you are buying another vehicle.

If the vehicle has usable value after any outstanding finance has been settled, that equity may be available to contribute towards the deposit or purchase price of the replacement van.

The exact figures cannot be confirmed until the vehicle has been valued and any existing finance settlement has been checked.

What Is Part-Exchange?

Part-exchange is when your existing vehicle is traded in as part of the transaction for another vehicle.

The vehicle is given a valuation based on factors such as:

• Age

• Mileage

• Condition

• Service history

• MOT history

• Specification

• Current market value

• Current demand

That valuation is then compared with any finance still outstanding on the vehicle.

What Is a Finance Settlement Figure?

If your existing van or car is still on finance, the current lender can provide a settlement figure.

This is the amount required to settle the existing finance at that point.

The part-exchange value and settlement figure are then compared to establish whether there is positive or negative equity.

What Is Positive Equity?

Positive equity means the vehicle is worth more than the amount required to settle its existing finance.

For example, if the agreed part-exchange value is higher than the settlement figure, the difference may be available to contribute towards the new vehicle transaction.

Whether all of that equity is used as a deposit depends on the structure of the new finance agreement and the customer’s circumstances.

What Is Negative Equity?

Negative equity means the settlement figure is higher than the vehicle’s current part-exchange value.

For example, if a vehicle is valued at less than the amount still required to clear the finance, there is a shortfall.

That shortfall must be dealt with before the existing finance can be settled.

Depending on the circumstances, this may mean:

• Paying some or all of the shortfall separately

• Changing the replacement vehicle or deposit

• Considering another agreement structure where a lender permits it

Customers should not assume that negative equity can automatically be added to a new finance agreement. This depends on lender criteria, affordability and the proposed transaction.

Can Part-Exchange Cover My Full Deposit?

Potentially.

If there is enough usable equity in the part-exchange vehicle, it may be sufficient to meet the required deposit.

However, the required deposit itself is determined by the lender and proposed finance agreement.

A part-exchange does not guarantee a particular deposit level and does not guarantee finance approval.

Can I Add Cash to My Part-Exchange?

Yes, it may be possible to use both part-exchange equity and a cash deposit.

For example, a customer may have some equity in the existing van and choose to add further cash to reduce the amount that needs to be financed.

The final structure depends on:

• The vehicle being purchased

• The part-exchange valuation

• Existing settlement

• Deposit

• Lender criteria

• Affordability

• Final approval

Will a Bigger Part-Exchange Deposit Lower My Monthly Payment?

Using more equity as a deposit can reduce the amount that needs to be financed.

That may affect the monthly payment, but the final payment also depends on other factors such as:

• Agreement term

• Interest rate

• Vehicle price

• Fees

• Deposit structure

• Lender terms

It is therefore better to compare a full finance quotation rather than assuming a particular monthly reduction.

What Information Will Be Needed About My Part-Exchange?

You may be asked for information such as:

• Registration number

• Current mileage

• Make and model

• Age

• Condition

• Service history

• MOT information

• Details of any outstanding finance

• Current settlement figure where applicable

• V5C/registered keeper information

The V5C helps identify the registered keeper but should not be described on its own as proof of legal ownership.

Additional checks may be required before the vehicle is accepted in part-exchange.

Can I Part-Exchange a Car Instead of a Van?

Potentially.

Whether a particular car or commercial vehicle can be accepted depends on the vehicle, the supplying dealer and the proposed transaction.

A valuation must be carried out before any figure can be relied upon.

Does Using Part-Exchange Guarantee Finance Approval?

No.

The finance application remains subject to:

• Lender criteria

• Credit checks

• Affordability

• The replacement vehicle

• Deposit requirements

• Final lender approval

A strong part-exchange position can help structure a transaction, but it does not replace the lender’s assessment.

Frequently Asked Questions

Can my current van be the whole deposit?

Potentially, if there is enough usable equity and the lender accepts the proposed deposit structure.

What if I still owe finance on my current van?

A settlement figure must be obtained. The part-exchange valuation is compared with this amount to calculate the available equity or shortfall.

What is positive equity?

It is the amount left when the vehicle’s value is greater than the finance settlement.

What if I owe more than the vehicle is worth?

That is negative equity. The shortfall must be dealt with as part of the transaction and cannot automatically be transferred to a new agreement.

Can I use part-exchange and cash together?

Potentially, yes. The exact deposit structure must be agreed as part of the new finance quotation.

Next Step

Use the buttons below to view the available vans or request a finance quotation so your part-exchange and deposit options can be considered.

Next step

Browse available vans or request a personalised van finance quotation to see how your part-exchange could be used in your new vehicle purchase.