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How to check if a car has outstanding finance

Buying a used car with outstanding finance left to pay is never a good idea – you should always check before you buy

Car finance

If you're looking at buying a car, it’s important that you check if there’s any outstanding finance left to pay on it.

Purchasing a car that has outstanding finance could lead to you losing the vehicle and being left out of pocket, so it’s always best to check before going ahead.

You can check if a car has outstanding finance by using an online service – there are plenty around that are cheap or sometimes even free to use.

What is outstanding finance on a car?

If the owner of a car still has finance left to pay on their vehicle, they shouldn’t be selling the vehicle on as they don’t have legal title to it – the car actually belongs to the finance company. The amount still payable to the lender is known as outstanding finance.

If you purchase a car with outstanding finance, you could face issues where you’re unable to prove that you’re the rightful owner of the vehicle.

To stop this from happening, it’s best to check before you buy that the full finance balance has been cleared.

If not, it can be hard to prove that you’re an ‘innocent buyer’ – it’s best to try and avoid having to do this from the get-go!

Types of outstanding car finance

The most popular types of car finance are Hire Purchase (HP), Personal Contract Purchase (PCP), and personal loan.

Usually, an outstanding personal loan isn’t secured against the car, so the vehicle can be sold and the balance settled after the sale.

HP and PCP finance are secured against the vehicle, meaning the finance company can take the car back if payments are missed.

This is the type of finance that will most likely cause issues if you buy a car that hasn’t been paid off.

Can I check if a car has outstanding finance?

You can check if a car has outstanding finance by using an online service. These search tools will check if there’s any finance left to pay on the car, but some can also check insurance write-off status (to see if your car has previously been classed as a write off and is still road-safe) and can recall the number of previous owners and MOT history.

Usually, you can find these services for free or for relatively cheap, though more in-depth checks cost more.

What should I do if I bought a car with outstanding finance?

If you’ve purchased a car with outstanding finance and didn’t realise at the time, you may have the right to keep the car if you can prove you’re an innocent buyer.

You should keep hold of anything that will help prove your case – these could be things like the original car advertisement, any messages with the seller, and receipt of the sale.

This will help you prove that you weren’t aware of the outstanding finance when you bought the car.

The finance company will probably still be in touch and will have to investigate whether it believes you have good title of the car.

As long as you didn’t have knowledge of the outstanding finance and can prove it, you may be able to keep the car.

Can I sell a car with outstanding finance?

You can’t sell a car on finance as you’re not the legal owner until you’ve paid the full balance, unless the profits from the sale are going to pay off the remaining balance – this has to be done with your lender’s permission, however.

You’ll have to pay off the full finance amount to be able to legally sell, whether this is through your normal monthly repayments, or working with your finance company to pay off the balance early.

There might be the option to pay a settlement amount and finish your contract early, at which point you can legally sell the car.

If you used a personal loan to buy your car and didn’t secure it against the vehicle, you can sell the vehicle before it’s paid off. That’s because you’re the legal owner already, and the loan isn’t secured against the car.

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