Car finance fraud: tips to avoid buying a car with outstanding finance.
Drivers Unaware Of Outstanding Finance Risk
HPI claims that 42% of drivers do not know who owns a car that is subject to outstanding finance and – as this can lead to financial loss – has revealed its top tips to keep buyers safe. The history check specialist says a car belongs to the finance company until the account is settled. If sold beforehand, it can be reposed from the buyer - even though the finance is in the previous keeper's name. This can encourage a seller to misrepresent a vehicle, pocket the entire sale price, then leave the new keeper to deal with the finance provider. HPI's survey also shows that 23% of buyers think a name on the log book is proof of ownership, but this is not true.
Outstanding Car Finance: Innocent Purchaser Protection
A motorist that purchases from a dealer is backed-up by innocent purchaser protection (IPP). Neil Hodson, Managing Director for HPI explains: “If a consumer buys a car from a dealer that later turns out to be on outstanding finance, IPP gives them a solution to the problem. The buyer simply needs to contact the finance company and explain that they are an innocent purchaser and be able to provide evidence that they purchased the vehicle from a dealer in goodwill.
Outstanding Car Finance: Private Buyers More Vulnerable
A motorist that buys privately is more vulnerable. Mr Hodson adds: ”The buyer stands to lose both the car and the money they paid for it. The best form of protection for these car buyers is to conduct a vehicle history check which not only includes an outstanding finance check as standard, but which is backed by a guarantee.”
Avoid Buying A Car With Outstanding Finance
- “If a car you are about to buy has 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.
- 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”.