How to avoid buying a car with outstanding finance?

With around 90% of private buyers using finance in any sort of way to purchase a new car, this is something to take into consideration when you are shopping for a used car. Our handy guide explains what it means if you accidentally fall into the trap of buying a car with outstanding finance on it from a private seller, as well as advice on how to avoid making this mistake completely.

The popularity of buying a car on finance is incredibly high, so it’s no wonder that outstanding finance checks are something more and more people are doing to research before handing over your cash. In fact, it is illegal in the UK for a seller to knowingly sell a car that has outstanding finance on it without informing the finance company to ask for a settlement figure to pay off the loan in full. However, that doesn’t mean that you can’t become a victim of buying a used car with outstanding finance if the seller hasn’t been honest with you.

What happens if I unknowingly buy a car with outstanding finance?

If you’ve fallen into the trap of buying a used car that has finance left to pay from the lender, this can get you into a tricky situation. You may be contacted by the finance company that issues the loan as they may still want their money back that is owed on the car.

In these circumstances, you can dispute against paying the loan by explaining that you bought the car with good intentions and that you had no knowledge of the car carrying financial debt. In this instance, it is called ‘good title’. It will be up to the finance company to prove that you do not have ‘good title’ rather than you pitching your case to them.

This will require your time and effort to respond to emails or calls about the car with the finance company, which can take up your valuable time and can potentially put you at risk of paying someone else’s outstanding finance. Lenders won’t easily back down to unpaid payment installments.

If you buy a used car from a private seller that knowingly sold you the car with finance left to pay, chances are they may be tricky to get hold of. Alternatively, the seller may have been unaware of the outstanding finance if they had purchased it off a previous seller that sold it to them dishonestly. These situations can cause a lot of stress and time sorting out problems that were never yours.

Carry on reading to find out how to avoid this.

How do I find out if a car has outstanding finance to avoid this?

Make sure that you have all the details about the car you want to buy prior to handing over the cash. The quickest, safest and reliable way to find out about any outstanding finance on any car is by running the car registration plate through our outstanding finance check. This will give you a full car report about the car history, including if the car has any outstanding finance on it.

Outstanding car checks are instant and affordable so that you are in the know about the car you wish to buy, which will save you a lot of money in the long run. Especially if a car has finance still to be paid on it, which can run into thousands of pounds. Our outstanding car check report will also break down other history factors about the car, including MOT history, number plate history, keeper history, and mileage history.

What should I do if I find out the car I want to buy has outstanding finance?

If you have used our car check report and the details come back that there is outstandingfinance on it, we highly advise you to walk away from buying it. Now that you are fully aware of the finance still held on the car, you are just as responsible as the seller.

This will mean that you do not have ‘good title’ and the lender may find this out if you decide to go through with the sale and they contact you about the finance still left to pay. His could also mean the lender may recover the vehicle as they will still legally own it if you do not pay the debt.