Have you bought a car only to find it has outstanding finance on it from the previous owner? Understandably it can be really stressful and worrying when you discover the car you invested in was bought on finance that hasn’t been repaid. So, what options do you have and do you have a leg to stand on if you’ve got proof of purchase?
Understanding the law
Did you know it’s actually illegal for someone to sell a car with outstanding finance in the UK? You’d think that would deter sellers from doing it, but unfortunately it happens far more often than you might think.
Legally, if a car is bought on finance, before it can be sold, the owner needs to contact the company. They will then usually offer a settlement amount which would need to be paid in full before the car is sold on. There may also be some early repayment fees charged which need to be paid.
So, with that in mind, what happens if you do buy a car with outstanding finance?
Could you really be responsible for the outstanding finance?
Sadly, if you do buy a car with outstanding finance on it, you are considered responsible for paying it back by the finance company. Whoever the legal owner of the vehicle is, will be responsible for any existing repayments due.
There is literally nothing legally you can do to avoid paying the remaining finance; especially if you bought the car from a private seller. It’s not right, but a private seller is not obligated to state whether the car has finance on it. So, if they didn’t let you know they aren’t breaking the law. There’s also no real way to get out of paying the finance off.
That’s why it’s so important to prevent getting into this situation in the first place. Having a check carried out from a company like HPI Check, is a great way to check for outstanding finance. You should also ask outright whether the car has finance and ideally buy from a dealership, rather than a private seller.
Overall, there are so many things to look out for when you’re buying a used car, and outstanding finance isn’t typically something most buyers would even think about. However, the repercussions if you do buy a car with outstanding finance can be huge, so you should always make sure you carry out extensive checks before you agree to buy.