- How can I protect myself?
- What are the implications?
- Parkers explains the ins and outs
Outstanding finance refers to the amount of money which is still owed on a vehicle. The registered keeper is liable for the remaining balance and the car will be owned by the finance company until this is paid off.
How does it affect me?
If you buy a car with finance still outstanding, you – as the new registered keeper – are liable for the remaining amount and will not own the car until this has been paid off.
This could cost you thousands of pounds on top of the amount you paid the previous driver of the car, so it’s well worth doing a Parkers car and vehicle history HPI check to avoid being ripped off.
What if the car I want to buy has outstanding finance on it?
Ask the vendor to acquire a settlement figure (remaining balance on the car) from the finance company. Ideally, the vendor will then pay this amount – although they may ask you to contribute some or all of the costs. It’s then up to you whether to stump up the cash or walk away.
Remember, don’t ever pay for the car on the basis that the vendor will then go away and settle the finance – doing so could leave you seriously out of pocket.
I’ve bought a car with outstanding finance, what can I do?
You have three options. The first is to hand the car back to the finance company. The second is to pay off the outstanding amount owed on the vehicle.
The third is to claim that, under section 27 of the Hire Purchase Act 1964, you – as a private purchaser – bought the car in good faith without knowledge of the outstanding finance and therefore hold good title to it. Remember, it’s illegal to sell a car with finance outstanding.
It’s worth noting that by not carrying out an HPI Check before the transaction you may compromise your position by not conducting due diligence.