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Put simply; outstanding finance is when someone sells a vehicle without paying off the finance they’re still liable for. With the popularity of hire purchase agreements being used to purchase cars, it’s becoming a bigger problem than ever before. Whilst it may seem incredible, it’s perhaps not as uncommon as you think with dubious people offloading their vehicles without settling previous finance agreements.
It’s easy to avoid this particular headache through our premium vehicle check. For less than a tenner, you can avoid this pitfall and safely check for any outstanding finance.
Unfortunately, despite most people being honest and reliable, there is an element of society who have no conscience about selling cars without settling with their finance company first. It happens more often than you think. If you end up purchasing a car with finance still attached, the finance company, who in most cases still own the vehicle if there is finance outstanding, will look to track the car down and seize it from you.
If you own a vehicle that you’re thinking about selling but it’s still under some finance, you are legally obliged to settle any outstanding finance on the car. Whilst it’s not illegal to sell a vehicle with finance attached to it, you must obtain agreement from your finance company and pay all outstanding finance, including any early repayment fees and administration fees.
There are many forms of ‘outstanding finance’ that could potentially be attached to vehicles. We’ve listed some of the most common ones below:
– Hire purchase (HP) is when the lender owns the car until the loan is fully repaid, including the final ‘option to purchase’ fee.
– Lease/Contract Hire is when a leasing/hire company owns the car, and ownership will not pass to you until the finance is fully settled.
– Personal contract purchase (PCP) is when the finance company owns the vehicle until all conditions are satisfied, usually after all payments are made. It often has a large final ‘balloon’ payment.
– A personal loan is when the lender has no interest or claim in the vehicle but has registered the personal loan as part of the Governments Responsible Lending drive. If the car you are interested in has this type of finance, you should seek clarification from the seller of the vehicle and the lender.
Through our premium vehicle check, you’ll be able to check whether a vehicle has any outstanding finance and, if applicable, you’ll be able to see who the finance company is and the finance agreement details.