Outstanding finance - what it is and how to deal with it

  • How to avoid buying a car with outstanding finance
  • Car history checks explained
  • What do to if you want to buy a car with debt attached

You’ve found the car you want for the right price, you’ve checked its service history, taken it for a test drive, and you’re ready to hand over your money – but what if there is something the seller is not telling you?

Statistics say one out of every four cars for sale has some form of outstanding finance. If you buy a car with a hidden history then you could find yourself responsible for a debt run up by a previous owner.

Worse still, you might not actually own the car despite having parted with thousands of pounds. This means it could be repossessed - leaving you without a car, and the money you spent on it.

Unlock your car’s hidden past with a history check

When car shopping, it is vital that you undertake a history check before parting with any money. This will flag up whether any money is still owed, as well as checking whether the car has been stolen or written off, which the seller may be reluctant to tell you.

In addition, a history check will also tell you whether there is a discrepancy with the mileage or identity of the vehicle, whether the V5 has been stolen or the numberplate changed, as well as giving you a CO2 rating and valuation.

If you buy a car without doing a history check and later discover it has a hidden past, then collect all the paperwork you have for it, including any receipts or registration documents, and contact the Citizens Advice Bureau.

How to buy a car with outstanding finance

What if you find the car of your dreams, and the seller is upfront about existing finance? Maybe they are a friend, a family member, or someone else you trust.

Firstly, you and the seller will need to confirm a settlement figure from the lender, which will set out exactly how much is needed to pay off the finance for the vehicle.

Once this is paid back in full and you have written confirmation that no more money is owed on the vehicle, you could treat it like any other used car purchase.

However, do not, in any circumstances, pay for the car on the understanding that the seller will pay back the finance later. There's every chance that they could take all the money and not pay the debt.

If you're not happy with any of the arrangements or something feels wrong, then don't be afraid to walk away.

Once you've decided on the right type of finance for you, make sure you visit our finance section for a quote - we work with over 21 lenders to give our customers access to over 100 different lending options.