posted 2 years ago

HPI Helps Car Buyers Avoid Finance Fraud

HPI Reveals Finance Fraud Technique

HPI has highlighted the threat that finance fraudsters pose to second-hand buyers. Danger comes from both deliberate ploys and honest mistakes. Let us consider a scenario. A motorist buys a brand new vehicle which he funds via Hire Purchase. This ensures he has the use of – but not ownership of – the car throughout the contract. He will not own it until the finance company receives the final payment. Naturally, it should not be sold until this step is complete. The problem is that the motorist sells without making his final payment. The buyer – who could have protected himself by checking the car's history via HPI – pays in full, but has no right of ownership. It is therefore repossessed by the vehicle finance company. Now, whereas our seller is unscrupulous other people mistakenly believe they have the right to sell. Either way - it is buyer beware.

HPI Boss Discusses Finance Fraud

Shane Teskey, HPI Senior Consumer Services Manager, said: “We have seen that people use the money raised from the sale of a car to address more pressing, short term, financial pressures and don’t pay off the car’s outstanding finance agreement itself. Roughly a third of motor fraud cases are believed to involve customers selling their car without settling their finance agreement in full. This is known as conversion fraud and really became common place as a result of the recession. Whilst the economic situation is improving, conversion fraud remains an issue. In some cases, customers are not aware that they are not the legal owners of their car and do not realise that selling it is fraud. The finance company remains the owner of a car until all outstanding finance has been paid”.

HPI Tips To Avoid Finance Fraud

“Always conduct a vehicle history check before you buy – it will tell you if the car has outstanding finance against it and enables you to ensure that the finance agreement is concluded before you complete the purchase.

If a car you are about to buy is on outstanding finance, raise two bank drafts - one in the name of the finance company for the outstanding amount of the loan and one for the seller for the remainder.

The provision of a seller receipt or purchaser receipt will not stop a finance company trying to reclaim the vehicle from the buyer if the car later turns out to be on outstanding finance – so never accept one as proof the vehicle is clear of finance. 

If you unwittingly buy a car on outstanding finance and discover this to be the case afterwards, don’t delay – negotiate with the finance house that holds the car’s title.” 


It is true log book loans don't show up on HPI checks.The government knows this,they have discussed it and decided to do nothing about it.Log book loans should have been banned,but once again the law helps the criminal and not the honest.

log book loans dont show up in hpi checks so buyer beware

Are Log book loans covered as part of HPI check? People have fallen foul in the past by this.