Car Finance Check

Buying a car is a serious business. It is serious not just because you are choosing a car which you must be able to rely on, but it is also serious because it involves a large amount of money.

But you may find yourself getting a car which involves an even larger amount of money than you planned to spend if there is some hidden finance already on the car. Some people sell on a used car when there is existing outstanding finance on it.

What does outstanding finance mean?

Around two million cars a year are bought in the UK, and a huge amount of these are done involving a car finance deal with a lending company.

When people buy cars, they often have to borrow to fund the purchase. If you’re interested in a used car there’s a good chance it was bought on credit. This credit is usually secured or linked to the actual car.

Most people who have borrowed against a car usually have paid it off before selling it. Others change the car finance arrangement and make sure the car is free of debt before selling it on. But not everybody behaves so honestly.

A small but not insignificant number of people don’t make sure their car finance is settled before selling their vehicles on.

If someone sells on a car without paying any remaining car finance or letting a buyer know, it is illegal. They are acting fraudulently and committing a criminal act. But that doesn’t stop some people from doing it.

Quite simply, it is not the car owner’s to sell on. Because they are not actually the owner.

What does it mean for you if you buy a car with outstanding finance?

Until a car loan has been fully paid off or the loan company has made an agreement with the previous owner, it is not the car owner’s to sell on.

In the eyes of the law, the vehicle belongs to the finance company.

This means that if you ended up buying a car with outstanding finance, you legally will not own it until the existing finance has been paid off.

This means you will usually have to pay off the outstanding debt yourself.

This situation can be complex. You will need to deal with the vehicle’s finance company which is still owed the money, as well as the previous owner who sold you the vehicle. In complicated cases, you might also need legal advice.

So it definitely makes sense to find out if your car has any outstanding finance before you buy.

Can you force a previous owner to pay an outstanding debt on a vehicle?

This depends on whether you have actually bought the vehicle or are still negotiating with the previous owner.

If you are still negotiating and find out there is still debt on a car, you can make sure the previous owner pays the debt off. Should they choose not to do that, you can renegotiate the price to take into account the existing car finance on the vehicle. If neither of these options works, you also have the option of pulling out of the deal.

However, if you have already bought the car and then discover the outstanding finance linked to the vehicle, the situation is challenging. You cannot force the previous owner to pay. The debt will fall to you.

This means you should always try and do a check for any existing car finance BEFORE you buy a vehicle.

Is a car finance check needed for brand-new cars?

Although a car finance check is always vital for used cars, it is sometimes needed by people buying brand-new cars too. This is because car dealers may have unit stocking or demonstration stocking finance arrangements in place to fund the vehicles they have on their forecourt. If a finance check shows either unit stocking or demonstration stocking linked to a seller of a brand-new car, then talk to the car dealer about the situation. Then make sure you get a written guarantee that they will pay off the financing on the vehicle you are purchasing.

How can you find out if a car has outstanding finance?

Unless you check the state of any outstanding finance, you can be left out of pocket. This can be painful especially when you have already paid out for the car itself.

Don’t worry. We have built this tool to let you check if your car has existing finance before you buy.

All we need is the registration number of the car that you’re interested in.

Simply type in your car registration number below and a full car spec will be created. Your registration number or number plate is also sometimes referred to as your VRM (Vehicle Registration Mark).

What sort of details does our finance checker include?

When you use our finance checker, you find out several things. If there is any outstanding finance on the car, then the type of financial agreement will be shown. There will also be the date on which the previous owner made the deal. We will try and show you the size of the outstanding car debt. You’ll also get the finance deal reference number and the name and contact details of the lending company. This information will give you 100% confidence in whether a car comes with existing finance or not.

How reliable is our car finance checker?

Our car finance checker uses data from a variety of sources to compile a full financial history. This includes the Driving Vehicle Licencing Agency (DVLA) and the Driver and Vehicle Standards Agency (DVSA). We also look at finance databases such as the Motor Insurance Anti-Fraud Theft Register (MIAFTR), Motor Insurance Bureau (MIB), and the Experian Asset Register. It also draws on the Police National Computer database. This means we use official government police records as part of our checks. All cars that have existing finance will show up.

What are the different types of car finance agreements?

Financial arrangements are always complicated. This is often because there are a variety of different funding options open. Some of the main types of car finance agreements are:

• Hire Purchase (HP): A buyer borrows against a car and does not own it until the whole amount has been paid off to the lender. This includes the final “option to purchase” charge which is linked to the vehicle. Hidden HP finance on a car means you do not own it until all outstanding money is paid.
• Conditional Sale: Under this finance arrangement, the finance company hold onto ownership until specific steps linked to bills are paid. Sometimes there may also be conditions linked to a car’s upkeep and insurance. All of this will be spelt out in the Conditional Sale documentation. Once again, you do not own it until all outstanding money is paid.
• Credit Sale: The previous owner will have become the owner even if there is still outstanding borrowing. You would still, however, need to discuss this sort of arrangement with the seller to make sure they are paying off any remaining amounts before you buy the car.
• Personal Contact Purchase (PCP): All payments must be made by the previous owner before they can sell a car.
• Personal Loan: The finance company has an arrangement with the borrower which is not directly linked to a car. However, if the lender is taking the property of a person to settle a debt on a car then they may well come for a car if they do not realise the ownership has been transferred.

What about cars that are leased or done through contract hire?

If a previous owner is leasing or contract hiring a car, they will never have owned it and never planned to own it. They are selling a car that is not theirs to sell unless they have bought it from the company. If you buy a car which is leased or covered by a contact hire arrangement, it will not be yours until you’ve paid off its cost, even if that cost arrangement was made by the previous owner.

Can you sell a car with outstanding finance?

Yes, you can, providing you are doing so honestly and declare the finance to the potential buyer so they can take the outstanding amount into account. You would also need to be sure that the lender’s terms and conditions allow you to sell on with outstanding finance.

Or you can pay off any remaining vehicle finance before you sell.

But if you sell on a car without paying any remaining car finance or notifying the buyer, you are acting fraudulently and committing a criminal act.

What does a ‘good title’ mean in reference to car ownership?

Your seller will have ‘good title’ to the vehicle if they own it and have the documents to prove it. Ownership means they own the car outright without any existing car finance.

What other issues should you think about?

Other things you need to think about when buying a used car are linked with its history. We can also help you make sure that it has not been written off by using our number plate technology.

Our online and database searches also look for things like a car’s vehicle emissions, its car tax status, as well as when its MOT is due, and any history of number plate changes. We also cover the full spec of the vehicle which you’re looking at.